Efficiency assessment of simulated corporate power purchase agreement structures with distinct features via data envelopment analysis

Francisco Simões, Carla Henriques, Nuno Carvalho Figueiredo and Patrícia Pereira da Silva

Energy Economics, 2025, vol. 148, issue C

Abstract: Corporate Power Purchase Agreements (CPPAs) with renewable energy developers have gained significant popularity among companies globally. These contracts enable companies to decarbonise their operations and protect against electricity price volatility. However, companies remain exposed to certain risks, including price, profile, and volume risks. The extent of these exposures varies based on the contract's design, as different combinations of price structures and electricity profiles result in contracts with different levels of risk exposure. By addressing a gap in the literature, this article evaluates the relative efficiency of simulated CPPAs with different designs in the Iberian Electricity Market (MIBEL). We propose a novel benchmark approach to quantify the CPPAs performance from the companies' perspective. Additionally, we employ a Slack-Based Measure (SBM) Data Envelopment Analysis (DEA) model with cluster analysis to compare contract performance. Our findings show that the Baseload Annual (BLA) electricity profile offers better risk mitigation across all renewable energy technologies. Furthermore, a Fixed Price (FP) structure delivers optimal financial performance regardless of the technology and electricity profile. Finally, the study identifies BLA FP contracts as the best trade-off for companies prioritising financial performance and BLA with a Variable Price structure for those focused on risk mitigation.

Keywords: Corporate power purchase agreements; Renewable energy; Data envelopment analysis; Monte Carlo simulation; Risk management; Iberian electricity market (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:148:y:2025:i:c:s0140988325004529

DOI: 10.1016/j.eneco.2025.108625

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