Congratulations! The successful signing of a Power Purchase Agreement (PPA) is a significant milestone in any organization’s journey toward securing renewable energy solutions. However, the journey doesn't end with the signing. The true value of a PPA lies in effective management. 

To ensure optimal performance, compliance, and financial benefits, organizations must navigate a complex mix of factors. For instance, they need to meticulously monitor the contract's clauses to guarantee enforcement and the ability to report on the contract’s environmental performance accurately. Below, we go into detail about all the factors businesses need to consider when managing PPA agreements. 

Reconciling Forecasted and Actual Consumption  in Your PPAs

Power Purchase Agreements (PPAs) are a strategic tool for businesses to secure their energy supply and ensure they are contributing towards the decarbonization of electricity grids. However, a consideration businesses need to continue to measure after signing a PPA contract is any gap that emerges between forecasted and actual energy production, also known as volumetric risk. Discrepancy will mean the PPA asset is not performing as expected and can lead to a mismatch between the volume of Energy Attribute Certificates (EACs) received and the organization’s real-world electricity consumption. As we explored in our previous blog, bridging this gap by purchasing additional certificates can be both costly and inefficient.  

Flexidao’s platform provides real-time insights into energy consumption patterns, enabling businesses to identify discrepancies between forecasted and actual usage. By proactively addressing these differences, businesses can avoid financial losses and optimize their energy management strategy. 

Managing Liquidity Risk through Accurate Forecasting

Forecasting generation and cash flows are critical for businesses to manage liquidity risks. By accurately predicting future energy production and market prices, businesses can better plan their financial strategies. Digital platforms like Flexidao’s provide long-term financial settlement forecasts, enhancing cash flow predictability and budget accuracy. This ultimately reduces the risk of discrepancies and errors in settlements.

The Need to Manage EACs Related to PPAs

EACs are essential for verifying renewable energy consumption and demonstrating compliance with global sustainability standards such as CDP, SBTi, and RE100. However, managing them can prove complex, often involving challenges like accurate tracking, reconciliation, and regulatory compliance. Our solution simplifies EAC tracking and data integration, enabling organizations to maintain accurate records and streamline compliance processes with international reporting standards. 

Staying Ahead of Regulatory Changes with Digital Compliance Tools

Growing emphasis on sustainability has led to tighter regulations surrounding contractual-based energy reporting, including the Corporate Sustainability Reporting Directive (CSRD). 

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The CSRD mandates detailed reporting on a company's environmental and social impact, including energy consumption, greenhouse gas emissions, and water usage. It also introduces the concept of double materiality, requiring companies to assess both their environmental impact and their financial exposure to climate-related risks. 

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To comply with these evolving regulations, companies must devote significant resources to complex reporting obligations. This includes accurate tracking of the Energy Attribute Certificates (EACs) related to their PPA contracts, reconciling them with actual energy consumption, and ensuring compliance with international standards.

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 The EU Commission is actively working to introduce measures that promote the use of power purchase agreements (PPAs) as long-term tools to guarantee price stability to both suppliers and consumers. This includes ensuring the process of signing PPAs is beneficial to all, making PPAs more accessible to a wider range of businesses. As more PPA contracts become accessible to businesses and reporting on their environmental reporting becomes more stringent, ensuring robust digital monitoring of these contracts will be crucial to avoid compliance risks. 

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Elevate PPA Management with Flexidao

Managing signed PPAs can be complex, especially when dealing with fluctuating energy markets and evolving regulations. Flexidao's platform simplifies this process by providing real-time data, insightful analytics, and up-to-date regulatory information so you can automate risk monitoring and optimize your contract performance .

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Looking to streamline your PPA management? Our experts can help you achieve your renewable energy and sustainability goals