A renewable PPA with an evening gap
A three-period teaching case tests the difference between renewable quantity, interval matching and cash-flow protection. The company, prices and profiles are invented for learning, not a reported transaction.
Permanent case linkYour task
Compare a pay-as-produced PPA with a firming alternative, and state what renewable claim the available evidence can support.
Your role
Energy procurement analyst for a commercial customer
Practice data & worked solution
A renewable PPA with an evening gap
Original synthetic teaching data, not an actual company or observed market event. Three one-hour periods at a single matched price reference. Customer buys all load at the listed spot price; a separate financial PPA receives spot and pays fixed on eligible output. Strike A$70/MWh. No losses, retail/network charges, premiums, taxes, credit costs or negative-price exclusions. Assume each output MWh has one eligible electricity attribute available to this buyer; no claim is certified by the exercise.
| Period | Load MWh | Eligible PPA output MWh | Spot AUD per MWh | Strike AUD per MWh |
|---|---|---|---|---|
| 1 | 40 | 60 | -20 | 70 |
| 2 | 40 | 30 | 60 | 70 |
| 3 | 40 | 0 | 200 | 70 |
Your analysis
- Calculate physical purchase cost, PPA net receipts to the buyer and net energy cost in each period and in total. Check the sign in the negative-price period.
- Compare aggregate renewable quantity with interval-coincident matching. Explain what evidence is still needed for an environmental claim and why electricity certificates cannot be replaced by ACCUs one-for-one.
- Raise the final-period spot price to A$300/MWh with all profiles unchanged. Recalculate net cost and propose a firming or procurement alternative, naming the additional price and contract evidence needed.
Worked solution
Cash-flow reconciliation
Physical costs are −A$800, A$2,400 and A$8,000: total A$9,600. PPA receipts are −A$5,400, −A$300 and zero: total −A$5,700. Net costs are A$4,600, A$2,700 and A$8,000: total A$15,300, or A$127.50 per customer MWh. Net cost equals physical cost minus net receipt. Negative receipts are payments by the buyer.
Quantity is not timing or claim eligibility
Load totals 120 MWh and eligible PPA output 90 MWh, so the aggregate ratio is 75%. Coincident matching totals min(40,60) + min(40,30) + min(40,0) = 70 MWh, or about 58.3%. The 20 MWh first-period surplus cannot physically move itself into the final-period gap. Attribute eligibility, ownership, vintage, surrender/retirement and the applicable framework still require evidence; an ACCU uses tCO2-e rather than MWh.
Evening sensitivity and decision
The final-period increase adds 40 × A$100 = A$4,000 to physical cost. The PPA receipt is unchanged because its eligible quantity is zero in that period. Total net energy cost becomes A$19,300. A shaped hedge, firmed product, storage or demand flexibility may change the exposure, but each needs its own price, performance, constraints and rights assessment. This is a fixed-profile sensitivity, not an optimal procurement recommendation.
Review your response
- Cash flows: all three periods and totals reconcile; payment and receipt signs are explicit.
- Boundaries: physical supply, price protection and environmental attributes are kept separate.
- Integration: the answer links demand shape, renewable output, contracts, certificates and customer requirements.
- Decision: a proposed alternative states residual risk, missing evidence and an approval gate; no unsupported renewable or accounting claim is made.
This checklist supports self-review. No tutor marking or independent credential is included.
Related topics 7
Sources & evidence
Original interval dataset, PPA settlement assumptions, CER certificate guidance and BRC-A structure explanation
BRC-A PPA structure explanation (2019)