Throughout this post, we will walk you through the 6 most important points that we consider when running a PPA tender.
1. Design a clear timeline
That outlines all key stages of the tender process, including:
- the release of the tender documents
- the evaluation of commercial bids
- the negotiation of legal conditions
- the awarding of the contract
2. Define PPA objectives
Clearly define the objectives of the PPA tender, including:
- PPA start date
- Duration
- Structure
- Hedge percentage
- Delivery type
3. Get in touch with potential offtakers
Potential offtaker candidates will need to be selected according to your unique requirements, in regard to:
- the type of offtaker (corporate vs utility)
- Bankability
- PPA delivery type
- the timeline of tender processes
4. Estimate project value through data-driven metrics
Production and electricity market data provide good indications on the risk-return profiles of individual projects. Many of these are covered in the PPA Evaluation Tool, such as:
- Production profile volatility
- Imbalance costs
- Net present value sensitivities
- Capture rates
A correct interpretation of these metrics will ensure you a clear comparision of different PPA offers.
5. Establish an evaluation and tracking mechanism
Define traceable and transparent criteria, e.g. quotation dates to evaluate the bids received by the various offtakers.
Synertics PPA Evaluation Tool makes this process easy and accessible by providing data-driven and continuous insights based on current market data and multiple PPA pricing metrics.
6. Produce clear tender documentation
Provide detailed instructions to potential offtakers on the tendering process and technical, commercial, legal, and financial requirements of the PPA, such as:
- Non-disclosure agreement
- Project presentation and production data
- Term sheet
- Main PPA contract
About Synertics
Synertics provides advisory services and develops digital data-driven solutions for the energy industry with the purpose of driving productivity and transferring knowledge.