Power Purchase Agreements
Power Purchase Agreements (PPAs) are between the purchaser (i.e. a private company or a state-owned local utility) and a power producer (i.e. Reon Energy Limited) to secure the payment stream. PPAs, which are generally for the time period of 15 years, safeguard the future
electricity prices at a predetermined price while offering the quickest way to achieve your sustainability goals. PPA creates a win-win scenario for both the producer and the consumer as it mitigates the risk of uncertainty in energy prices and guarantees offtake for the producer. Considering the energy shortage in Pakistan, we have identified key elements in the energy sector and devised an amazing solar energy solution.
References
Our diversified experience in renewable energy projects development gives us an edge to help you navigate the complexity of PPA contracts. Browse through the case study beneath to find out how companies have benefitted from a PPA.
Project Size: 5MW
Contract Type: Take or pay for 15-years at fixed rate per unit (Built Own Operate Model)
Tariff Structure: Fixed Rate Tariff
The Situation:
Sindh Engro Coal Mining Company Limited (SECMC) is a joint venture of Engro & Affiliates and Government of Sindh.
The Mining activity in Thar Block-II requires electrical power that is partially being supplied through Solar Power Plant on BOOT basis for the period of fifteen (15) years. During the earlier years of operation, the power requirement of the mine was being fulfilled by diesel generation. Due to high fuel costs and global oil price volatility, SECMC entered into the first Private Power Purchase Agreement (PPA) with an approved Generation License from NEPRA.
The SOLUTION:
- 5MW solar based power generation system with civil structures and auxiliaries
- Complete solar based power generation with monitoring, control and synchronization with existing diesel gensets
IMPACT:
- Roughly 40-50% reduction in cost per unit for diesel power displaced by solar energy
Project Size: 1.85 MW
Contract Type: Take or Pay for 15 years (Built Own Operate Model)
Tariff Structure: Discounted Rate as compared to Off-Peak Grid Tariff
The Situation:
Procter and Gamble Pakistan has a goal of purchasing 100% renewable electricity globally by 2030 and has been aggressively pursuing renewable energy avenues. P&G Pakistan, to achieve this goal and mitigate rising electricity tariffs over the years requested an OpEx solution for renewable energy at commercially discounted rates versus grid. The project was implemented towards the end of 2020.
The SOLUTION:
- NEPRA approved Generation License for Solar based Power Generation System procured with end-to-end solar plant being installed with complete monitoring, control, and synchronization
- Agreement signed on PPA basis to achieve renewable targets, reduce costs, and save on Capex for P&G Pakistan.
IMPACT:
- 2.8 GWh of annual energy units displaced by solar energy i.e., equivalent to 1,800 Tons of carbon savings annually
- Roughly 30-40% reduction in cost per unit for grid displaced by solar energy
How does it work?
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Ahmad Shahzad
Ahmad Shahzad
Ahmad holds 10 plus years of experience in Business Development with a particular interest in Power Purchase Agreements. Ahmad has deep know-how of industries in the Armed Forces segment. He has led the account deals for 12.5 MW solar project and another 55 MW in the cement industry.
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