LevelTen Energy, operator of the world’s largest PPA marketplace, has launched PPA Auctions, a faster way to contract power purchase agreements (PPAs). LevelTen’s PPA Auctions are a response to the industry’s need for new solutions that can keep up with today’s market conditions, including surging demand for PPAs.
PPAs take 12 months to execute on average, and every week increases the chance of deal failure. LevelTen’s PPA Auctions shave off months from average contracting timelines by streamlining the process. Furthermore, PPA Auctions are designed to increase the certainty of deal success while delivering advantages to both the seller and buyer.
How it works
LevelTen facilitates PPA Auctions by bringing together reputable developers and experienced buyers that are equally motivated to get deals done.
- Developers initiate a PPA Auction by engaging LevelTen to review their project and jointly outlining desired PPA terms that accurately reflect current market conditions, including volume and contract structure.
- LevelTen markets the PPA to its extensive buyer network, which includes the largest corporations, more than 45 energy advisors representing hundreds of buyers, and energy resellers. Developers can also invite their network of buyers to participate. Gathering experienced and motivated buyers around a high-quality project creates the ideal conditions for developers to receive competitive bids.
- Buyers participate by submitting a notice of interest, reviewing the PPA terms, and submitting a bid along with critical details, including their credit rating and PPA experience. Once a bid is selected, both parties can confidently move forward to finalize the deal.
Benefits for sellers and buyers
PPA Auctions enable developers to quickly secure an optimal buyer and an attractive PPA price for their projects — typically those with advanced project maturity. And, PPA Auctions provide experienced buyers who are ready to transact with a faster way to achieve their decarbonization targets, many of which have quickly approaching deadlines. Moreover, buyers can access the market’s best PPAs — the ones most likely to achieve commercial operation, on time.
LevelTen has piloted several PPA Auctions that have yielded attractive bids, and shortened the time it takes to arrive at term sheet negotiations. Accelerating PPAs can make a big difference in the speed of the energy transition because corporate PPAs are a significant source of new clean energy capacity. In 2022, corporations in the U.S. and Canada contracted 17.5 GW of clean energy, which is nearly the equivalent of all the new solar and wind capacity additions installed (17.8 GW) last year.
Tags: Financing, LevelTen Energy, PPA, PPA Auctions
