PPA structures are evolving, and the challenge of Hybrid PPAs lies behind understanding and quantifying the benefits of flexibility, and how it’s reflected in the pricing. The risk profile of the asset is the core determinant of its fair value. And since energy storage changes the risk profile of the generation part, this would need to be reflected in the price. To understand what’s driving the Hybrid PAP pricing, it would be better to go through how benchmark PPA prices are modelled, and the risk components driving the fair value of the energy.

It is no longer a secret, nor a great insight, that we are in a revolutionary era in terms of the energy industry. Many technologies , greener and cheaper are implemented , a lot of assets we uses are being electrified (EV’s , heating solution) and more and energy , in general becomes more of commodity than an production resource. With that development, new challenges and limitations arise and create risks for industrial, commercial, and residential uses and processes.

Energy storage has been deemed one of the missing links of the energy transition for quite some time now. After the vast deployment of standalone storage assets, which tirelessly (and swiftly) respond for duty when the grid needs it, the long-awaited next phase of renewables-plus storage is finally approaching the mainstream! The term ‘renewables-plus-storage colocation’ has climbed the ladder in the renewable’s vocabulary, particularly in the merchant renewables sphere. But combining two business models requires the resolution of multiple riddles.