PPA Revenue#
The Revenue page for the PPA models provides inputs to define sources of revenue for frpnt-of-meter (FOM) projects. Possible sources of revenue include:
PPA revenue is from sales of electricity to the grid through a power purchase agreement (PPA). This is the primary source of revenue for most projects. You can specify a power price, or you can specify a target internal rate of return (IRR) and have SAM calculate the power price required to meet the target.
Capacity payments are optional payments to the project for available capacity.
Curtailment payments are optional payments to the project for reducing or stopping power generation during ceratain times.
Non-energy revenue is revenue earned from non-energy activities such as agricultural production.
You can also specify optional time-of-delivery (TOD) factors that modify the power price for projects with prices that vary on a daily, seasonal, or time series basis.
If you are modeling a merchant plant project with power prices at market rates, you can choose the Merchant Plant financial model instead of the PPA Single Owner model.
Note
For the PPA Partnership Flip and Sale Leaseback financial models, the PPA revenue inputs are on the Financial Parameters page.
To see the project revenue after a simulation, go to the Cash Flow tab on the results page. You can also see the revenue data on the Data Tables tab by filtering the table for variables with “revenue” in the variable name.
Solution Mode#
The Solution Mode inputs are where you determine how SAM calculates the PPA price, IRR, and other results that appear in the Metrics table on the Summary page.
The PPA price is the bid price in a power purchase agreement (PPA), and is the price that the project receives for each unit of electricity that the system generates. The internal rate of return (IRR) is a measure of the project’s profitability, and is defined as the nominal discount rate that corresponds to a net present value (NPV) of zero.
The solution mode determines whether SAM calculates a PPA price based on an IRR target that you specify, or an IRR based on a PPA price that you specify:
Solution Mode 1: Specify IRR Target#
The Specify IRR Target option allows you to specify an IRR target value and the year that you would like the IRR to be achieved. SAM finds the PPA price required to meet the target given your assumptions including financial parameters, incentives and depreciation, and the project’s installation and operating costs.
SAM uses an iterative algorithm to search for the PPA price that meets the IRR target in the year you specify. If it cannot find a solution, it finds the PPA price that results in an IRR and year as close as possible to the target values.
Note
For the Specify IRR Target option, SAM does not know the PPA price at the start of the simulation. In some situations, SAM requires knowledge of the PPA price when the simulation starts, so you must use the Specify PPA Price option:
For the PPA Price option on the Electricity Purchases page, SAM needs to know the PPA price as the simulation runs to calculate the cost of purchasing electricity to meet parasitic loads that occur when the system is not generating power, such as for photovoltaic inverter night-time consumption, battery charging, or concentrating solar power freeze protection.
For battery dispatch options on the Battery Dispatch page that charge or discharge the battery the battery in response to the power price.
- IRR target
The desired IRR target as a percentage:
For the Single Owner model the required IRR is the project IRR.
For the All Equity and Leveraged Partnership Flip and Sale Leaseback models, the target IRR is the tax investor IRR. SAM calculates the developer IRR as a function of the value in excess of the tax investor IRR.
- IRR target year
The year in which you want the target IRR to be achieved. For the partnership flip options, this is the flip year when project returns switch from the tax investor (pre-flip) to the developer (post-flip).
Solution Mode 2: Specify PPA Price#
The Specify PPA Price option allows you to specify the PPA price. SAM calculates the resulting IRR:
For the Single Owner model, SAM calculates the project IRR.
For All Equity and Leveraged Partnership Flip, and Sale Leaseback models that involve two parties, SAM calculates two IRR values: One from the tax investor perspective, and one from the developer perspective. For the partnership flip options, SAM also calculates the flip year when project returns switch from the tax investor to the developer.
- PPA Price
The power price in dollars per kWh. This is the price that would be negotiated as part of a power purchase agreement.
You can also click
and then Edit to use the Edit Schedule window to enter a different PPA price for each year of the analysis period instead of a single value.
Note
Regardless of the solution mode you choose, the PPA price is associated with the annual PPA price escalation rate if it increases from year to year, and the set of multipliers defined on the Revenue page. Be sure to use the “Uniform Dispatch” option for projects that do not involve time-of-delivery adjustments to the PPA price.
- IRR target year
SAM reports the IRR at the end of the analysis period and the IRR in the target year that you specify. You can use the target year to see what the IRR is in a given year. You can also see the IRR for each year in the cash flow . In Specify PPA mode, the IRR target year does not affect the cash flow.
Escalation Rate#
An escalation rate applied to the PPA price in Year One to calculate the power purchase price in years two and later in the project cash flow.
SAM does not apply the inflation rate to the PPA price. If you do not specify a PPA price escalation rate, SAM assumes that the same price applies in all years of the analysis period.
Time of Delivery#
Time-of-delivery (TOD) factors are a set of multipliers that apply to the PPA price so you can model a situation where the PPA price changes on an hourly, subhourly, and/or seasonal basis.
There are two ways to define TOD factors:
TOD factors by schedule Use this option to define the factors using up to nine TOD periods with hour-by-month weekday and weekend schedule matrices, or to choose TOD schedules from a library of data.
TOD factors by time step Use this option to assign a TOD factor to each simulation time step. For example, if you are running hourly simulations, you can assign a different TOD factor to each hour of the year.
SAM calculates the PPA price for each hour by multiplying the Year 1 PPA price shown in the results Summary page by the TOD factors you define for each of up to nine periods.
Note
If your analysis is for a project with a fixed PPA price that does not vary with time of day or month of year, use the TOD Factor by Schedule option, select Uniform Dispatch in the library and click Apply values from library to ensure that all of the PPA multiplier values are set to one.
Note
When you click Apply values from library, SAM replaces the TOD data with data from the library. If you are using your own TOD data, you can use the Save data to file button at the bottom of the Time of Delivery Factors page to save your data.
- Download forecast price data from Cambium
If you do not have time series price data for your analysis, you can download hourly marginal cost data for modeled futures of the U.S. electricity sector from the NLR Scenario Viewer . SAM runs the Cambium Time Series Prices macro, which prompts you to choose from the available price data, and then automatically sets the following inputs:
Chooses the Specify PPA price option.
Sets PPA price to $1/kWh
Chooses the TOD factors by schedule option
Converts the price data from $/MWh to $/kWh and set the TOD factors by time step to the downloaded price data.
For a discussion of how to use Cambium modeled price data in your analysis, see https://energyanalysis.lbl.gov/publications/integrating-cambium-marginal-costs.
To populate values from the library:
Choose TOD factors by schedule.
Click a row in the library.
Click Apply values from library.
To specify your own TOD factors by schedule:
Choose TOD factors by schedule.
Type a PPA price multiplier value for up to nine periods.
Use the schedule matrices to define the hour and month for each period as described below.
To specify your own TOD factors by time step:
Choose TOD factors by time step.
Click Edit array and enter your TOD factors in the table. If you want to enter time series prices in the table as $/kWh or $/MWh values, set PPA price to $1/kWh or $0.001/kWh respectively.
To download price data from the Cambium database:
Click Download forecast price data from Cambium and follow the prompts.
About TOD Factors by Schedule#
- TOD factors
For each of the nine periods in the list, to calculate the PPA price in a given period, SAM multiplies the Year 1 PPA price by the multiplier you specify. For example, if Period 1 is the summer peak, defined as Noon to 7 p.m. in June through September with a multiplier of 2.38, and the Year PPA price is 6 cents/kWh, the price that the project would receive for each unit of energy it sells during those summer peak hours would be 6 cents/kWh × 2.38 = 14.28 cents/kWh.
- Weekday Schedule, Weekend Schedule
The weekday and weekend matrices allow you to associate each of the nine periods with a time of day and month of year. To use the matrices, for each period, draw a rectangle on the matrix with your mouse, and type the period number with your keyboard. See Weekday Weekend Schedules for details.
About the TOD Schedules and Factors Library#
The TOD Schedules and Factors library stores a selection of TOD data that you can use to explore different scenarios if you do not have data from another source. You can also use one of the library schedules as a starting point and modify it to meet your requirements. Remember to click Apply values from library to use data after you click a row in the library list.
The library is stored as a CSV file in the libraries folder of your SAM installation. For details about how to access the file, see Libraries.
- Uniform Dispatch
This option removes TOD factors and schedules. Use this when the PPA price does not vary with time of day or month of year.
- Generic Summer Peak
This is a fictitious schedule with a June - September summer peak period and six TOD periods representing baseline, shoulder, and peak daily prices with with peak prices in summer afternoons.
- Generic Duck Curve
This is a fictitious schedule representing a basic “duck curve” shape with three TOD periods for a baseline night-time prices, peak evening prices, and low daytime prices.
- Generic Low Carbon Duck Curve
This schedule is based on data from an NLR California low carbon grid study for 2030 assuming 50% of the state’s electricity generation is from renewable energy sources. See Brinkman, G.; Jorgenson, J. (2016) Low carbon grid study: Analysis of a 50% emission reduction in California. National Renewable Energy Laboratory. NREL/TP-6A20-64884. (PDF 2.2 MB )
- California PUC Advice Letter Data
For the 2015 and 2016 data in the library, the factors are from the following California Public Utilities Commission Renewable Auction Mechanism Program advice letters:
PG&E 2016: Advice Letter 4780-E (January 22, 2016)
SCE 2015: Advice Letter 3244-E (August 6, 2015)
SDG&E 2015: Advice Letter 2717-E Attachment A (July 13, 2015)
PG&E and SDG&E offer different TOD options for projects that meet “energy only” or “full capacity deliverability” requirements, and SDG&E has options for “local” and “system” projects. Use your interconnection application and other documents to determine which TOD factors are appropriate for your project so you can choose the correct option in SAM.
For the 2009 and 2011 data, the factors are California Energy Commission Market Price Referent (MPR) values adopted by the California Public Utilities Commission (CPUC) in 2011. The SAM library includes values from Appendix B of Resolution E-4442 (2011) and Resolution E-4298 (2009). See the CPUC Resolution Search Form to find these documents.
Time of Delivery Factors in Results#
SAM reports hourly, monthly, and annual TOD-related results. You can view these results on the Data and Graphs pages.
Single Values#
The single value results are available .
- First year energy from the system in TOD period*****n*
The total quantity of electricity delivered to the grid (and sold) by the system in Year one for each of the nine TOD periods, in kWh per year.
- First year energy price for TOD period*****n*
The power price for each of the nine TOD periods, equal to the product of the TOD factor for each period and the PPA price shown in the Metrics table .
- First year revenue from the system in TOD period*****n*
The dollar value of electricity sold by the project in Year one for each of the nine TOD periods, in dollars per year.
Monthly Data#
The monthly variables are available on the Results page in Graphs and Tables.
- First year energy from the system by month for TOD period*****n*
The total quantity of electricity delivered to the grid (and sold) by the system in Year one for the given TOD period in each month, in kWh.
- First year revenue from the system by month for TOD period*****n*
Total dollar value of electricity sold by the project in Year one for each month.
Annual Data (All Years)#
Note
The first row in the annual data table is equivalent to Year zero in the project cash flow, before the system starts generating electricity.
- Energy produced by the system in TOD period*****n*
The total amount of electricity delivered to the grid (and sold) by the system in each year of the analysis period for each of the nine TOD periods.
- Revenue from the system in TOD period*****n*
The total dollar value of electricity sold by project in each year of the analysis period for each of the nine TOD periods.
Capacity Payments#
Capacity payments are is an annual payment to the project for available capacity. SAM reports the annual capacity payment revenue in the project cash flow.
The capacity payment is either the fixed amount you specify, or the product of the capacity payement ($/MW), system nameplate capacity (MW), and capacity credit (%).
Note
If your project does not involve capacity payments, set Capacity payment amount to zero.
- Capacity basis
Specify the annual capacity payment as a dollar per megawatt value with the capacity credit specified as a percentage of the system nameplate capacity. See the system nameplate description below.
- Fixed amount
Specify the annual capacity payment as a dollar amount.
- Capacity payment amount, $/MW or $/year
When you choose the capacity basis option, enter a $/MW value in Year 1 dollars for the annual capacity payment.
Note
SAM assumes the capacity payment rate in $/MW is an annual rate. If you are given a daily or monthly rate, you should convert it to an annual rate. For example, a $100/MW daily rate would be equivalent to $36,500/MW annually. Similarly, a $100/MW monthly rate would be $1,200/MW annually.
When you choose the fixed amount, enter a $ value in Year 1 dollars for the annual capacity payment.
You can also click the blue and grey Value/Sched button and then Edit to use the Edit Schedule window to enter a different payment amount for each year of the analysis period instead of a single value.
- Capacity payment escalation
The annual escalation rate applies to the annual capacity payment in Years 2 and later. If you expect the capacity payment amount to increase from year to year, enter the escalation rate as an annual percentage.
The capacity payment escalation rate is disabled when you choose the Schedule option to enter annual values for the capacity payment amount.
- Capacity credit (eligible % of nameplate), %
The percentage of the system’s nameplate capacity that is eligible for capacity payments when you choose the Capacity basis option. If this value is zero, no capacity payments will be made.
For systems with battery storage that earn a capacity payment based on the battery’s capacity in kW (maximum discharge power), you can use the capacity credit percentage to represent the battery capacity. For example, for a PV-battery system with a 100 MW array and 60 MWac battery, you could set the capacity credit percentage to 60.
- System nameplate, MW
The system’s nameplate capacity. Note that the nameplate capacity is defined differently for different kinds of systems. For example for photovoltaic systems, the nameplate capacity is the total DC array capacity, and for wind and concentrating solar power systems, it is an AC capacity.
- Battery maximum discharge power, MWac
For systems with battery storage, the battery’s maximum discharge power from the Battery Cell and System page.
For PV Battery and Custom Generation Profile - Battery configurations, SAM shows this battery capacity value for reference, but does not use it to calculate the capacity payment amount.
For Standalone Battery configurations, SAM uses the battery maximum discharge power to calculate the capacity payment amount.
Curtailment Payments#
Curtailment payments generate revenue in addition to energy payment or PPA revenue during times when the project is required to reduce or stop electricity generation by the electricity off-taker.
Use the grid curtailment inputs on the Grid page to define the curtailment schedule.
Curtailment Compensation#
- Curtailed energy compensation, $/kWh
The compensation rate in dollars per kWh of curtailed energy.
You can specify a single compensation rate as a Year 1 value with optional escalation rate, or click Sched and Edit to specify a compensation rate for each year using the Edit Schedule window.
For each hourly or subhourly time step, the curtailed energy is the system’s power output minus the curtailment limit from the curtailment table on the Grid page. The annual curtailed energy is the sum of the hourly or subhourly curtailed power values over one year. SAM shows the annual curtailed energy amount for each year in the project cash flow .
- Curtailed compensation escalation, %/year
The curtailment compensation escalation rate applies to the curtailment revenue in Years 2 and later when you specify the compensation rate as a single Year 1 value. SAM does not apply the inflation rate from the Financial Parameters page to the curtailment compensation rate.
Non-energy Revenue and Expenses#
Non-energy revenue and expenses allow for modeling of a project that earns revenue from non-energy sources in addition to sales of power generated by the system, or pays expenses that are not directly related to the energy system. Non-energy sources of revenue or expenses might be from agricultural activities for an agrivoltaic project, or other sources of revenue and expeneses that you want to include in the project cash flow.
Note
For the escalation rate inputs below, specify an escalation rate of zero for revenue or expense cost that increases annually at the rate of inflation, a positive escalation rate for one that increases at a higher rate than the inflation rate, or a negative escalation rate for one that increases at a lower rate than the inflation rate. (Set the inflation rate to the negative value of the inflation rate for revenue or expense that does not increase with inflation.)
Non-Energy Revenue#
- Gross non-energy revenue, $/year
Annual non-energy revenues to include in the project cash flow.
- Non-energy revenue escalation, %
Annual escalation rate that applies to gross non-energy revenue.
- Non-energy revenue retained by energy owner, %
Percent of non-energy revenue to include in the project cash flow. Use this input to specify revenue sharing agreements, for example, an agrivoltaic project where 5% of the crop revenue is retained by the solar owner in each year.
- Non-energy revenue available for debt service
Check this box if the system owner can use non-energy revenue to service debt. If the box is checked, SAM includes non-energy revenue in cash available for debt service (CAFDS).
Non-Energy Expenses#
- Gross non-energy expenses, $/year
Annual non-energy expenses that to include in the project cash flow.
- Non-energy expenses escalation, %
Annual escalation rate that applies to non-energy expenses.
- Non-energy expenses paid by energy owner, %
Percent of non-energy expenses to include in the project cash flow. Use this input to specify revenue sharing agreements, for example, an agrivoltaic project where 5% of farm expenses is paid by the solar owner in each year.
- Non-energy expenses impact debt service
Check this box to include non-energy expenses in the system owner’s total operating expenses, which reduce the amount of cash available for debt service. If the box is checked, SAM includes the owner share of non-revenue expenses in the earnings before interest, taxes, depreciation and amortization (EBITDA) cash flow line item. If the box is not checked, the owner share of non-energy expenses is included in the system owner’s operating activities line item.
Energy Owner Portion of Energy Revenue and Expenses#
Use these inputs to specify revenue sharing agreements between the energy owner and a partner entity. For example, a project where 95% of the energy revenue is retained by the system owner in each year, and 5% is retained by the partner entity; or a project where 90% of energy expenses are paid by the system owner, and 10% paid by the partner entity. Note that the remaining revenue or costs are not accounted for in the SAM’s cash flow, which does not represent the partner entity cash flow.
- Energy revenue retained by energy owner, %
Percent of energy revenue to include in the project cash flow. This includes PPA revenue, capacity payments, and curtailment payments, but not production-based incentives. Use this input to specify revenue sharing agreements, for example, where 95% of the energy revenue is retained by the solar owner in each year. Note that the remaining revenue is not accounted for in the project cash flow, so for this example, 5% of the energy revenue would not be accounted for in the cash flow.
- Energy expenses paid by energy owner, %
Percent of energy operating expenses to include in the project cash flow. This includes costs for operation and maintenance costs, battery replacement, electricity purchases to charge the battery, property tax and land-lease, but debt-related costs.