Power supply contract with a system: Why the choice of model is more important than the PPA price

In our previous article "If the power does not belong to the consumer: correctly calculating operator models and PPAs", we explained why PPAs always need to be viewed from two perspectives: that of the operator and that of the off-taker. This article goes one step further. Here we show which model variants exist, how ownership and remuneration can be combined, and which adjustment levers determine whether a PPA works economically for both sides.

Why onsite PPAs are changing direct PV marketing

In classic direct marketing of PV power, the energy flows via the grid to the exchange. In an onsite PPA, the electricity stays where it is generated - on the off-taker's premises.

• The off-taker saves grid fees and electricity costs without having to invest themselves

• The operator receives predictable revenues over the term of the contract

Not every PPA is structured the same way. Depending on how delivery and payment are arranged, there are three basic types:

• Pay-as-produced: The off-taker pays for the actually produced amount, regardless of whether they are currently consuming the electricity or not.

• Pay-as-consumed: Payment is made only for the amount that the off-taker actually consumes on site. Surplus quantities flow into the grid or storage.

• Pay-as-nominated: Delivery and payment are based on predefined quantities, typically on a daily basis.

Lumera calculates PPAs according to the pay-as-consumed principle: The off-taker pays only for the electricity they actually consume. Excess PV electricity is either remunerated via grid feed-in or stored in the battery. This corresponds to the standard billing model for onsite PPAs.

The first decision: Who owns the system?

Before price or remuneration are considered, one fundamental question comes first: Who owns what?

Combined model: The operator invests in PV and battery, and the off-taker obtains the electricity via a PV contracting model. The investment risk lies entirely with the operator. In return, feed-in revenues also go to them.

Battery-only: The off-taker already owns the PV system and retains the feed-in tariff. The operator invests only in the storage system. Their revenue comes from the additional optimization made possible by the storage system, such as through peak shaving or self-consumption optimization.

The second decision: How is remuneration structured?

Once the ownership question is settled, the remuneration model is chosen. Two approaches have become established, but many different combinations of remuneration are possible.

Model A: Fixed PPA price + peak shaving share

The off-taker pays a fixed price per kilowatt hour delivered. In addition, the savings in grid fees (through peak shaving) are shared according to an agreed formula. The sale of electricity to the off-taker at a fixed PPA price is only possible in the combined model (PV + battery with the operator).

→ Advantage: Both sides have clear, understandable revenue and cost streams.

→ Best suited when: The off-taker wants planning certainty and the tariff structure is manageable.

Model B: Share of total savings

Instead of a fixed PPA price, the operator receives a percentage of the total cost savings that the off-taker achieves through the system. Electricity costs, grid fees, feed-in revenues: Everything is included in the overall assessment.

→ Advantage: The operator automatically benefits from every saving achieved by the off-taker. The greater the savings, the greater their profit.

→ Best suited when: The tariff structure is complex or the savings are difficult to divide into individual revenue streams in advance.

⚠️ Important: The two remuneration models are mutually exclusive. Anyone who agrees on a fixed PPA price cannot simultaneously apply a share of total savings, as the incentives would conflict.

Additional: Lease payments in both directions

Regardless of the remuneration model chosen, the operator and off-taker can also agree on a fixed annual lease payment in both directions. The operator can pay the off-taker a roof rent, for example for using their roof area. Conversely, the off-taker can pay the operator a lease payment so that the operator has more security for their investment. These fixed amounts create additional planning certainty and make it possible to fine-tune the economic balance of the contract.

Separate prices for PV electricity and battery electricity

In the PPA price remuneration model, a single uniform price does not necessarily have to apply to all electricity delivered. In the combined model (PV + battery with the operator), the PPA price can be differentiated by source: one price for directly delivered PV electricity, another for electricity from the battery storage system.

Why is this useful? Direct PV electricity flows immediately from the system to the consumer, without detours and without losses. Battery electricity, on the other hand, has been stored in between: During charging and discharging, a few percent are lost due to efficiency, but the electricity is available flexibly over time and can be delivered specifically during high-price periods. Two separate PPA prices fairly reflect this difference in value. Depending on the contract, battery electricity can be priced higher or lower than direct PV electricity.

This differentiation also opens up a practical scenario: If an off-taker already has an existing PV PPA and subsequently wants to assess the economics of an additional battery PPA, this can be mapped and calculated precisely using separate prices.

⚠️ PV electricity always goes to the off-taker first: Regardless of the agreed PV PPA price, the generated PV electricity is delivered directly to the off-taker as far as possible. The PV PPA price therefore does not affect whether delivery takes place, but only how it is billed. For battery optimization, only the net load profile is used, i.e. the remaining load after subtracting direct PV supply.

⚠️ No arbitrage at the off-taker's expense: With dynamic electricity tariffs, it would theoretically be possible to charge the battery from the grid during low-price periods and then sell the electricity to the off-taker at the higher fixed PPA price. This is deliberately not allowed in Lumera's calculation. If such an arbitrage opportunity exists, action is taken in the off-taker's interest: They can cover the load not supplied by PV (net load) directly at the cheaper grid prices.

Who gets what? Feed-in remuneration and battery charging costs at a glance

Depending on the remuneration and ownership model, it is regulated differently who receives the feed-in remuneration and who bears the costs for grid electricity used to charge the battery. The following tables show the allocation for both system configurations, as implemented in Lumera's economic calculation.

PV + battery combined

In the combined model, feed-in remuneration always goes to the operator, because they own the system and bear the investment risk. There is one exception for battery charging costs: in the total savings model, the off-taker bears these costs, since they are included in the overall assessment of their savings.

Battery-only

In the battery-only model, the off-taker retains the feed-in remuneration, after all the PV system belongs to them. The off-taker also bears the battery charging costs. Pure PPA electricity sales are not intended in this configuration, because the operator only owns the storage system and does not generate any electricity of their own.

The adjustment levers that make the contract economical

The model choice sets the framework. Within this framework, specific parameters determine whether the PPA works for both sides:

Operator adjustment levers

• PPA price per kWh: the most obvious lever, but not always the biggest one

• Share of total savings: what percentage of the total savings flows to the operator

• Peak shaving share: what percentage of the grid fee savings flows to the operator

• Grid feed-in: surplus electricity brings feed-in remuneration (only in the combined model)

• Lease/rent: fixed annual payments, e.g. roof rent to the off-taker

Off-taker adjustment levers

• Reduced grid fees: peak shaving through PV and/or battery

• Lower electricity procurement costs: PPA price often cheaper than grid electricity

• Planning certainty: fixed costs instead of volatile exchange prices

• Mutual interest in savings: in the case of a savings split

Conclusion: Two questions before every PPA

1️⃣ Who owns what? The ownership question determines the investment split and the available revenue sources. If the off-taker already has a PV system, battery-only is the obvious choice.

2️⃣ How is remuneration structured? A fixed PPA price provides planning certainty, while a share of total savings fits complex tariff structures. The two models are mutually exclusive.