Corporate power purchase agreement: Formulation of the related levelized cost of energy and its application to a real life case study

Abstract

For corporate and industries the reducing of its environmental footprint is becoming more and more important, in order to improve the ‘green and social brand’ of their products and services. Many instruments may be used to this purpose but in recent years Corporate Power Purchase Agreement (CPPA) is the form of contract that is used more and more frequently. CPPA is a contract between an energy producer, from renewable sources and an end-user. Using CPPAs, the ‘green brand’ for a corporation and its product and services could be achieved. The main concern is related to the costs: still today, renewables are more expensive with respect to fossil fuels, therefore this results in higher prices for products and services, so a fair trade off between CPPA price and the gain of ‘green brand’ has to be determined. In this paper, the authors propose a method based on an opportune Levelized cost of energy formula able to support a stakeholder to define CPPA price and contractual length. A case study with significant results for a PV plant in the Italian real life application is provided. From the performed simulations emerges realistic ranges CPPA’s contractual length and price convenient for involved stakeholder. In particular the length should be not less than 7 years and not more than 10 years while the price should be in the range between 75 €/MWh and 100 €/MWh.