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Looking into Sleeved PPAs

Written by
Tomás Oliveira

Learn how this format can benefit your PPA transactions

2 min
18th Jan, 2024
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A Sleeved PPA is a renewable energy procurement arrangement where an intermediary, known as a "sleeve", facilitates the transaction between a renewable energy developer and a corporate buyer (offtaker), managing the associated risks and ensuring a seamless integration of renewable power into the offtaker’s energy portfolio.

The "sleeve" is usually considered the process in which a utility (for example) is taking the role of a Balancing Responsible Party (BRP), facilitating the transaction of electricity between the renewable energy developer and the offtaker.

The BRP is responsible for managing the imbalances between the supply of the project's generated electricity and the offtaker's demand, taking into account wholesale market price fluctuations.

This sleeving mechanism helps streamline the process, providing a bridge between both parties and ensuring a smoother and more manageable procurement of renewable energy.

 

Sleeved PPA

 

While coordinating with other existing energy sources to ensure a reliable and consistent energy supply for the offtaker, a key aspect of the BRP sleeving role is to mitigate the risks of the frequent imbalances between the scheduled generation of the developer and the forecasted consumption of the offtaker, bearing its associated costs. For the fulfilment of this task, the BRP receives a fee from the offtaker.

This arrangement is particularly attractive to offtakers who may not have the expertise or resources to engage directly with renewable energy developers and seek accessible decarbonisation options.

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PPA Origination, Structuring and Pricing