Representative public model · South Africa · Corporate power

A PPA can look cheap on the term sheet and still leave the buyer with an expensive power bill.

I built a representative 50 MWac generator-to-buyer model to see what happened after the headline PPA price. The buyer case included wheeling losses, network charges, service fees, residual grid supply and profile mismatch. It is a public analytical model, not a live quotation or completed client mandate.

50 MWac generator120 GWh Year 1 buyer loadR1.45/kWh delivered renewable cost17.3% illustrative buyer saving

The first check

I rebuilt the buyer’s bill before I looked at the saving.

The generator sees contracted volume multiplied by the PPA tariff. The buyer sees the PPA invoice plus network charges, losses, service fees, residual grid energy, demand charges and settlement adjustments. Those are different cash flows.

I therefore kept two linked views: one for generator economics and one for the buyer’s delivered cost. A saving on the buyer side could not be used to justify generator returns, and generator revenue could not be passed off as the buyer’s full electricity cost.

My read

Comparing a PPA tariff directly with a grid tariff is usually too early. I want the bill rebuilt after wheeling, profile mismatch and residual supply before I quote a saving.

What I would ask for on a live case

  • Half-hourly load and generation profiles, not just annual MWh.
  • The current Eskom or municipal tariff schedule and demand charges.
  • Connection point, wheeling path, loss factor and use-of-system charges.
  • Trader, balancing, billing and settlement fees.
  • Residual-supply terms and the treatment of surplus or shortfall energy.
  • PPA escalation, credit support, termination and change-in-law provisions.

The cost bridge

The R1.15/kWh PPA price became R1.45/kWh once the delivery layers were included.

Cost componentRepresentative treatmentWhy I include it
PPA energyR1.15/kWhThis is the generator’s contracted price, not the buyer’s total cost.
Network and use-of-system chargesAdded separatelyThese can change by injection point, account, municipality and tariff year.
LossesReduce delivered MWhThe buyer can pay for generated energy and receive less at the meter.
Balancing and servicesSeparate fee layerForecasting, nominations, imbalance and settlement all have a cost.
Residual grid supply24 GWh in Year 1The buyer still needs grid energy when the renewable profile does not match load.
Surplus / shortfallNeeds an explicit settlement ruleAnnual renewable share hides the value of energy arriving at the wrong time.
What changed my view

The 17.3% saving is not a market promise. It is the result of one set of assumptions. The more useful output is the break-even point: which PPA price, profile or network charge removes the saving.

Year 1 bill reconciliation

Buyer view

Grid-only baseline
R222.0m
PPA energy
R110.4m
Network and services
R28.8m
Residual grid supply
R44.4m
Total with wheeling
R183.6m
Illustrative saving
R38.4m

What I stressed

The buyer case became fragile when the assumptions outside the generator’s control moved.

I tested PPA price, avoided grid tariff, delivered energy and network charges. That showed whether the value was genuinely shared or whether one party’s downside had simply been shifted elsewhere.

StressCommercial effectWhat I would negotiate
PPA tariff +10%Buyer saving falls while generator return improves.A value-sharing range rather than negotiating the energy tariff in isolation.
Grid tariff -10%The avoided-cost benchmark weakens.A transparent tariff path rather than assuming high grid escalation forever.
Delivered energy -10%Generator economics weaken and residual supply increases.Profile and availability treatment separate from annual yield.
Network charges +20%Buyer saving compresses without improving generator revenue.Pass-through treatment, reopeners and savings floors where appropriate.
Combined downsideIllustrative buyer saving approaches 2%.A check on whether the transaction complexity is still worth it.

The contract questions

Each cost and risk in the model needs a clear owner in the documents.

Volume and profile

Who carries the mismatch?

Annual generation can exceed annual demand while the buyer still needs residual power. The PPA needs rules for surplus energy, shortfall, balancing and portfolio allocation.

EvidenceInterval profiles and settlement waterfall
Grid and curtailment

Who pays when the network cannot deliver?

Deemed energy, network outage, curtailment caps, force majeure and relief events decide who carries lost generation.

EvidenceConnection and wheeling agreements
Buyer credit

What happens after an early termination?

The generator needs payment security, termination compensation and replacement-buyer rights that make sense alongside the debt profile and break costs.

EvidenceGuarantee, LC and termination schedule
Metering and settlement

Which meter controls the invoice?

Meter hierarchy, data timing, adjustments, disputes and audit rights determine when a calculated saving becomes cash.

EvidenceMetering protocol and bill examples
Disclosure

This is an independent representative model. The tariffs, charges, capacity and savings are synthetic and do not represent a quotation, live client transaction, available network capacity or legal assessment. A live case must use current provider, municipal, trader and contract schedules.

Corporate PPA analysis

Want the buyer case rebuilt from the actual bill and interval data?

Send the tariff schedule, load data, generator case and proposed commercial structure. I will show where the saving comes from and which assumptions can remove it.

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