Virtual PPA based on electricity futures

On June 24th, OMIP, the Iberian Energy Derivatives Exchange, announced the launch of electricity futures, forwards and swaps in the Iberian markets with maturities extending up to 8, 9 and 10 years.

On July 2nd, the first virtual 10-year PPA was announced. It consists of 3x “SPEL Base Futures” yearly contracts from 2021 to 2030, each one comprising the delivery of baseload electricity at a constant power of 1MW during all hours of the delivery periods at a price of 40,40 EUR/MWh, for a total supply of 263GWh throughout the 10-year term. These contracts are marked-to-market daily, and cleared and settled at OMIClear, the Iberian Energy Clearing House.

This is a very interesting move that provides Iberian generators with an additional tool to reduce price volatility and increase predictability of project cash flows, facilitating access to sources of long-term finance.

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