What Makes up a Power Purchase Agreement


There are several components to a Power Purchase Agreement (PPA) that are additional to the price of Power.

Small scale power production can have agreements for 20 years under Feed in Tariffs.

However, large scale power production PPAs can only be guaranteed for up to 36 months in line with the forward pricing of power. As above, Power can make up to 70% of the PPA.

Renewable Obligation Certificates (ROCs) represent just under 1MW of eligible electricity output that is generated per certificate. These certificates are bought by suppliers from generators in order to fulfil their annual obligation.

LEC (Levy Exemption Certificates) which can make up to six per cent of the PPA agreement represent electricity produced from renewable sources. It is exempt from the Climate Change Levy and is entitled to Levy Exemption Certificates (LECs) which can be bundled with the power when sold to a supplier.

BSUoS (Balancing Services use of System) charges are paid by suppliers and generators based on their energy taken from or supplied to the National Grid in each half-hour Settlement Period. National Grid takes volumes used per HH nationally and then subsequently they calculate the BSUoS rate for each HH. This is published on the National Grid website.

Generator Distribution Use of System (GDUoS) charges relate to the positive charges and negative credits associated with the local distribution of exported electricity to the grid. GDUos for generators are calculated differently depending on where the generator is located and where they connect to the local electricity distribution network, but all charges are available on request from your local Distribution Network Operator (DNO) and will be part of any connection agreement that you have in place with them.

The Triad Periods are the three half-hours in each winter season (November to February) that have the highest demand peaks on the electricity network. As a generator, Triads are an additional bonus for generating exported power at these peak demand times.

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