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How will PPA proposals with different contract term lengths be evaluated on a market valuation basis?

April 26, 2017basis contract different evaluated lengths market PPA proposals term valuation

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How will PPA proposals with different contract term lengths be evaluated on a market valuation basis?

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Our basic approach employs an Option Model in conjunction with forward market curves to identify the economic value of the spark spread and other value sources associated with generation. Cash flows derived from this analysis are used to derive a value for each proposal. Extending the contract term length will change and extend the cash flows but will not change the method of evaluation. In addition, our other economic criteria include Debt Equivalence and Portfolio Fit. These will also be used in our evaluation and may have an impact on our overall analysis.