Increased demand for PPA solutions. Interview with Kari Tikkanen, PPA and offtake manager at OX2

It has become more common for investors in wind power to demand hedging of the revenues from the plant via so-called PPAs (Power Purchase Agreements), which are signed with a large electricity consumer. Alternatively, revenues can be hedged via state-regulated remuneration models / systems such as feed-in tariffs or CFDs (contracts for difference).

OX2 has a dedicated team that constantly works with the market for different kinds of electricity price agreements. Its aim is to be at the cutting edge with the best solutions for each individual project and its investors.

Rämsberget wind farm (21 MW) in Sweden.

Increased demand for PPA solutions. Interview with Kari Tikkanen, PPA and offtake manager at OX2

Rämsberget wind farm (21 MW) in Sweden.

It has become more common for investors in wind power to demand hedging of the revenues from the plant via so-called PPAs (Power Purchase Agreements), which are signed with a large electricity consumer. Alternatively, revenues can be hedged via state-regulated remuneration models / systems such as feed-in tariffs or CFDs (contracts for difference).

OX2 has a dedicated team that constantly works with the market for different kinds of electricity price agreements. Its aim is to be at the cutting edge with the best solutions for each individual project and its investors.

Kari Tikkanen,
PPA and offtake
manager at OX2

What does your work involve as a PPA and offtake manager?

My job is to offer financiers who invest in a wind power plant the opportunity to hedge their revenues by selling the electricity to electricity suppliers or large electricity consumers through long electricity contracts (so-called PPA), often 10-15 years from the commissioning of the project.


What is it that primarily drives the market for PPA solutions?

Historically, political support has been required to develop wind power as costs have been higher than possible revenues. At present, the technology for large-scale wind power in the Nordic countries has reached a production cost level that is in line with the electricity price market, which increases demand for PPA solutions.


What are the most common PPA solutions?

Most large electricity consumers are interested in PPA with an agreed delivery volume, because they have stable and predictable electricity consumption and are not experts in managing the variable production. Volatility is usually handled most effectively by those who own the plant as they are familiar with wind power as production technology. However, there are also electricity consumers and operators who see the management of the variable production as a focus area and are happy to receive the electricity according to its actual production profile because greater risk allows for a lower price.


What does OX2 want to offer the market for electricity price hedges in the future?

We want to increase understanding of the risks and how we can offset them in our projects. We are also working continuously to reduce transaction costs by standardising terminology and agreement structures.


Kari Tikkanen,
PPA and offtake
manager at OX2

What does your work involve as a PPA and offtake manager?

My job is to offer financiers who invest in a wind power plant the opportunity to hedge their revenues by selling the electricity to electricity suppliers or large electricity consumers through long electricity contracts (so-called PPA), often 10-15 years from the commissioning of the project.


What is it that primarily drives the market for PPA solutions?

Historically, political support has been required to develop wind power as costs have been higher than possible revenues. At present, the technology for large-scale wind power in the Nordic countries has reached a production cost level that is in line with the electricity price market, which increases demand for PPA solutions.


What are the most common PPA solutions?

Most large electricity consumers are interested in PPA with an agreed delivery volume, because they have stable and predictable electricity consumption and are not experts in managing the variable production. Volatility is usually handled most effectively by those who own the plant as they are familiar with wind power as production technology. However, there are also electricity consumers and operators who see the management of the variable production as a focus area and are happy to receive the electricity according to its actual production profile because greater risk allows for a lower price.


What does OX2 want to offer the market for electricity price hedges in the future?

We want to increase understanding of the risks and how we can offset them in our projects. We are also working continuously to reduce transaction costs by standardising terminology and agreement structures.


“The production cost for wind power is now in line with the electricity price. This increases the demand for PPA solutions” Kari Tikkanen, PPA and offtake manager at OX2