Modeling Renewable Power Purchase Agreements Prices

Power Purchase Agreements (PPA) play a significant role in deploying renewable energy, a crucial development to meet climate change challenges. Participants set the PPA price through opaque negotiation processes. We present novel, replicable, and transparent financial models to compute the PPA price. The models utilize closed-form formulas or numerical copulas. Using all utility-scale solar and wind PPA prices in the world's sixth-largest economy, California, from 2012 to 2020, with solar (wind), the copula model (closed-form) has a root mean squared relative error (RMSRE) of 9.20% (6.84%). Competing models based on production costs have an RMSRE of 33.83% and 27.43%, respectively