Energy Yield Insurance and PPA 2.0

April 19, 2022

Sellers of renewable energy face alternative risks compared to traditional, fuel-based energy producers. Even through intense study, research, planning and engineering, a producer cannot control the volume of e.g. a wind farm or solar farm. The uncertainty if the renewable energy resource is available in time places risks to the economic viability of the renewable energy asset itself, especially in the context of sales contracts like e.g. Power Purchase Agreements (PPAs). Energy Yield Insurance agreements allow for producers to be protected from the risks related to wind volatility, power curve deficiencies in renewable energy assets, and electrical losses which may occur at the grid connection point of a renewable energy asset.

In this paper we discuss the following topics:

  • PPA 1.0 vs PPA 2.0
  • Risk categories of a Renewable Energy Asset
  • What is insured?
  • Insurance Structure
  • overview of instruments

“Energy Yield Insurances are very often necessary instruments which can be integrated in renewable energy assets under operation as well as assets under development. Since these agreements can significantly reduce the shape risk for sellers, Energy Yield Insurances are fostering the availability of Baseload PPAs in future PPA markets. We call them PPAs 2.0 which have a strong potential to accelerate the energy transition, even during volatile market situations. This paper shall support you to generate the necessary knowledge about this instrument to consider it in future renewable energy projects.”

Dr. Steffen Hundt, CEO & Co-Founder Think RE

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Team member photo

Dr. Steffen Hundt

CEO & Co-Founder at Think RE
Team member photo

Ronny Bendlin Spür

Senior Originator at Munich RE