Salesforce PPA with EDF Noteworthy for its Term and Capacity Limit
The number of corporate PPAs is noteworthy, and positive.
It seems corporate procurement reduces stranded asset risk — by increasing the number of potential offtakers for a particular project.
The terms of these agreements, however, need to be considered, because they make the future revenue stream more uncertain than typically would be the case.
By example, the Salesforce PPA has a 12-year term, as opposed to a more typical utility purchase of 20-25 years. And the PPA only applies to a portion of the project’s overall size. These two facts create interesting questions, that shouldn’t be ignored, about forecasting the future revenue to the landowners’ that host the turbines for these projects.
It’s safe to think the project’s presumed useful life will extend beyond 12-years, and at least for the life of the PPA for the balance of the project’s capacity. But whether that additional capacity can/will be sold and for how much has to be factored in to the analysis of future revenue.