The spiraling of gas prices during recent months is translating into an increase in the cost of electricity, which is directly related to the price of gas. In this scenario, long-term purchase contracts (e.g., PPA power purchase agreements) would allow final consumers to be protected against the high volatility of energy prices that would otherwise be difficult to manage.
To date, the adoption of such contracts is affected by the limited outlook of market prices over time horizons of more than 3-5 years, which makes it difficult for customers to decide whether to rely on PPAs (power purchase agreements) or not. In addition, for both counterparties, it is difficult to provide/receive adequate guarantees. Other obstacles, such as non-economic barriers, would disadvantage long-term contracts in the power market. Moreover, PPAs cannot guarantee an exact match between production of renewables and consumption by the client.
This Challenge aims to identify possible regulatory, market and financial solutions that would allow the development of long-term contracts, especially for electricity from renewable sources.
The project should include:
- an executive summary based on a presentation summarizing the key concepts of the proposed solution;
- a document, or a presentation, or a mix of both, explaining in detail the policy and regulatory context, the feasibility and the potential of the proposed solution.
SDG 7: Affordable and Clean Energy.