1. Potential Impact on PPA Contracts
IWFA Workshop 24th January 2014

2. PPA Solutions
Established in Aug 2012: Hugh Mullany and Rory Mullan - Mullany Engineering Consultancy and Mullan Grid
What we have been doing?
Restructuring Supplier Lite Registrations
Reviewing PPA Options
Negotiating PPAs for Merchant, REFIT II and REFIT III
Review Terms & Conditions of PPAs
Audit and review of REFIT I PPAs
Setting up Supplier Lite Structures
Due Diligence
Review SEM prices for Generators
Registering Generators for LECs
Supporting REFIT audited year-end submissions

3. Today Current PPA Position of Generators
Questions to consider to understand impact of European Target Model on Existing PPAs

4. The Power Purchase Agreement
Supply Co.
BILL
PPA
Fixed: A fixed rate per MWh, without or without indexation
Pass through: All SEM/REFIT/LEC/GO revenues, less a flat
administration fee or price per MWh traded
Floor with upside, or price guarantee

5. Types of Generator PPAs
Support Scheme PPAs
AER
Electric Ireland
REFIT I & II
Any 3rd Party Irish Supplier
Supplier Lite
Outside Support Scheme PPAs
Merchant - market pass through
3rd Party Suppliers
Fixed price with 3rd party supplier
Hybrid with 3rd party supplier
Terms of PPAs
AER PPAs to conclude up to handfull of AER III end of 2014
REFIT I – conclude 2021 onwards
REFIT II - conclude 2027 onwards

6. Current Market Structure - SEM
GENERATION
SUPPLY
MONEY
POWER
Single Electricity Market
PPA
Supply Co.
BILL
Supply Co.
BILL
Wind > 10MW
Intermediary
What is changing is the market – so what does the current market delivery to wind generators
Wind
<10 MW
Outside SEM/ Negative Demand
PPA

7. Single Electricity Market
SEM Payments & Charges
GENERATION
SUPPLY
PPA
Supply Co.
BILL
Single Electricity Market
POWER
MONEY
Intermediary
Charges
- Energy (SMP)
- Capacity
- Imperfection
- Market
Operators
Payments
- Energy (SMP)
- Capacity
Wind > 10MW
The payments are made to suppliers – generator share of these payment depends on the PPAs
Wind
<10 MW
Outside SEM/ Negative Demand
PPA

8. SEM 2012/13 Wind Weighted Average (€/MWh)
2012/13 SEM Prices
SEM 2012/13 Average (€/MWh)
SEM 2012/13 Wind Weighted Average (€/MWh)
Energy - SMP
66.1
63.5
Capacity Payment
6.9
5.8
Capacity Charge
14.6
15.0
Imperfection Charge
4.7
Wind Generator > 10 MW
69.3
Wind Generator < 10 MW
83.2
Difference (€/MWh)
13.9
% Difference
20%
Difference €14/MWh – 20%

9. Benefits of Current SEM Structure
Identical generators producing the same power at the same time receive the same revenues
Shared SMP and Capacity Payment
Transparency of prices
Wind prices are relatively close to average prices
Generators < 10 MW can register as negative demand
Relatively low cost to operate in SEM
Difference €14/MWh – 20%
Good for wind
You can clearly see what value the supplier for your energy

10. New Market Changes New prices:
Day Ahead
Within-Day
Balancing
Supplier who has bought your power under a PPA can choose how to trade-on your power
That choice impacts how much money your windfarm makes
Choice may be restricted by lack of available counterparty
Identical generators producing the same power at the same time receive revenues based on their trading skill
Market starting around Nov 2016
The requirement for the three prices are laid down in the EU target model – not up for debate
Who, how and when you participate in each of these markets is main issue in the consultations
Available courterparties in the day ahead and within day markets

11. Impact of new Market on Existing PPAs
Support Scheme PPAs - REFIT I & II
Relevant differences in REFIT I & II
The REFIT II reference and technology rate (not including balancing payment) is guaranteed and has to be passed on to the generator
Less potential for market upside in REFIT II
Market Change Clauses in PPAs
Two general types of Market Change Clauses:
Allow mechanical changes, for examples changes in payment timelines
Reopening of price negotiations to allow both parties to maintain commercial positions
If the supplier is making less money trading your power, they may – PPA permitting – seek to change the price under the PPA
Relying on

12. Impact of new Market on Existing PPAs
Support Scheme PPAs - REFIT I & II - continued
What market prices will be utilised by CER for REFIT?
For forecasts (Day Ahead, Within Day, Balancing)
For reconciliation (REFIT currently tops up any supplier to the guaranteed rates, irrespective of how much or little money the supplier has made selling on your power)
Impact on potential for upside if allowed under the PPA
Impact of changes in PPA on loan agreements
Should also consider impact of new market on project revenues post REFIT term
Could be a lot of complexity on how forecasting, reconciliation and subsequent auditing will be done for REFIT
Question; What will happen if there is a big difference between the average market revenue from different generators being submitted for REFIT calculations
Will an auditors be able
How muchh transparency will there be to calculate upside

13. Impact of new Market on Existing PPAs
Outside Support Scheme PPAs
Merchant - market pass through
Term of current PPAs generally end in 2016 or earlier
Availability, structure and price of new PPAs post 2016??
Fixed price with 3rd party supplier
Depends on Market Change Clauses in PPA
Need to also consider new market’s impact on future project revenues
PPA structure required for repowering?
Who knows
At least a moderate risk to revenue streams for projects outside PPAs

14. Impact of new Market on Existing PPAs
General
Will there be Capacity Payments & Capacity Charges?
What will market revenues be like in the European Target Model?
Will the choice of when to trade make much of a difference on revenues?
Will <10MW generators still see the benefits of offsetting demand?
Cost of forecasting and trading in the new Market?
Implementing of priority dispatch?
And of course the detail ….
Having current capacity payment has been good for wind – not too volatile
What charges will be levied on demand – not clear
Will there be additional charges on demand customers vs generator customers
Negative demand will not protect your from balancing risk
What the political impact be on the PSO pot.

15. Conclusions Know Your Own Position
Too early to fully understand potential impact
Need to stay informed
Ensure this sector has a strong voice, individually and collectively

16. Rory Mullan rory@ppasolutions.ie
Thank You
Rory Mullan