Advanced Quantitative Assessment Methodology for Power Purchase Agreements Contracts

Power Purchase Agreements (PPAs) are essential for financing renewable energy projects, providing revenue stability while exposing investors to market volatility and operational risks. Assessing their financial performance requires a structured approach that considers market evolution, price volatility, production variability, and contract design. Thus, a quantitative framework for evaluating solar PPAs under different market conditions is proposed through Monte Carlo simulations and risk assessment techniques. The model analyzes key contract types, such as Pay-as-Produced and Baseload types, quantifying their financial performance through indicators like Internal Rate of Return, Value at Risk, and Expected Shortfall. A case study on the Italian market illustrates how geography, pricing structures, and coverage levels influence PPA outcomes. The findings provide key insights for investors and developers, supporting data-driven decision-making in structuring renewable energy contracts.