CfD PPA
The PPA for physical power offtake (‘CfD PPA’) is a critical consideration for any projects successful in the CfD auction, as significant additional value can be secured by minimising the discount to the day-ahead market to capture more of the strike price. Renewable Exchange can ensure an optimal CfD PPA is secured via a comprehensive tender process to the whole of the market and efficient contract execution.
REGO Optimisation
REGOs are a significant source of value for CfD projects. By exploring multiple contract tenors or trading the certificates wholesale, Renewable Exchange can help maximise the REGO value and increase the levered equity return.
Merchant Nose PPA
The ‘merchant nose’ PPA covering the period between commissioning and CfD delivery is a further commercial consideration for new projects. Renewable Exchange’s PPA platform was built for tendering such PPAs through an efficient and competitive tender process, making it easy to optimise revenues from the crucial early stages of the project’s life.
You've been offered a CfD - what next?
In the CfD scheme, the LCCC (scheme's governing body) considers only the difference between the Intermittent Market Reference Price (IMRP) and the strike price agreed in the contract. Where the strike price is above the IMRP, the LCCC will issue a top-up payment. Where the IMRP is above the strike price, the difference has to be paid back to the LCCC. The IMRP is calculated as a volume-weighted average of the two day-ahead auctions: EPEX and N2EX.
Generators must remember and factor into their bid that they will not receive the full strike price from the LCCC, but only the top-up to the IMPR. Generators therefore need a power purchase agreement (PPA) that pays as close to the full IMRP as possible, factoring in the balancing costs and offtaker’s other associated costs.

When to start looking for a PPA?
You can secure your CfD route to market PPA any time following a successful outcome in the auction. The tender process for such contracts via Renewable Exchange takes just two weeks to access the whole market of 30+ offtakers.
If looking to sign a fixed price merchant nose, timing is more significant as the price available fluctuates with wholesale prices. The Renewable Exchange platform enables you to track the price available via our daily project-specific price forecast, and then access that pricing within just 2-3 days.
PPA Contract Structuring for CfDs
CfD route to market PPAs are typically indexed to IMRP. They can be indexed to N2EX or EPEX, but this introduces a slight element of risk if that auction varies significantly from the other. This is most notable with EPEX, since IMRP is volume weighted and therefore heavily influenced by N2EX since this is the more prevalent of the two. By securing a PPA indexed to IMRP, generators are removing this slight element of risk.
Generators have two main options for the discount to IMRP. This can either be a fixed £/MWh value, or a percentage (%). The fixed £/MWh value is typically preferred by generators who are more risk adverse, since it fixes the level of discount that the project will take in relation to its strike price. This can be locked in for the full 15 year duration of the CfD, ensuring maximum revenue security.
In contrast, a percentage discount can potentially allow for short-term revenue maximisation. However, the upside risk is significant compared to the additional gain. If day-ahead prices spike, the project could face heavy discounts to its strike price.
When securing the CfD route to market PPA, it's important to be fully aware of all the options available and the implications for your project. Renewable Exchange’s experts can assist you in ensuring you are fully informed and able to secure the best PPA available from the market in a transparent and efficient tender process. Get in touch to discuss your specific requirements.
There are some basic risks associated with choosing either option, as there are small differences between the prices captured between them.
👉 Speak to the PPA Experts at Renewable Exchange to discuss your options.