IRENA Workshop on Power Purchase Agreements
April 5, 2016 // Kuwait City, Kuwait
With power demand set to grow seven percent annually in MENA through 2020, renewable energy is poised to boom across the region. In order to secure this transition to a low-carbon energy system, governments throughout MENA must provide enabling regulatory and policy frameworks that promote investment into renewables while reducing project development risks to an appropriate level.
Many MENA countries are launching Energy Power Producer’s Procurement Programs and the investment in various technologies is set to increase across the region. In procuring renewable energy, it is critical that MENA decision-makers understand how specific regulatory and policy measures influence project risks, and ultimately the development of Power Purchase Agreements (PPAs) with and for independent power producers. Various strategies exist to simplify processes, reduce time and transaction costs for renewable energy projects. Understanding and employing these risk mitigation and transfer strategies will be key for MENA decision-makers to realize their energy transition.
Proposed Approach and Target Audience
A dedicated workshop took place alongside of the MENAREC-6 Conference in Kuwait City, Kuwait on Wednesday, 5 April 2016 as an official side session in collaboration between IRENA and KISR. Selected renewable energy decision-makers from the MENA region were able to discuss how to structure and negotiate bankable PPAs for specific renewable technologies taking into consideration the policy, regulatory and economic environment(s). The workshop examined global experiences so as to showcase lessons learned from successful and unsuccessful cases and their effects on PPA development.
The workshop focused on the following strategies, among others:
- Global and regional trends and investors impacting IPPs & PPAs;
- The role that governments and regulators play in PPA schemes;
- The role of financial risk mitigation instruments;
- Project and PPA standardisation and aggregation;
- Frameworks for third-party sales and excess production;
- Efficiently managing grid/land access and guarantees and contract enforcement;
- Addressing relevant specifics of RE PPAs, including dispatch and remuneration;
- The role of PPA in cross-border electricity service sales.
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