Managing renewable energy contracts (PPAs, CPPAs, FPAs) – FIS Approach by CTRM Center

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MANAGING RENEWABLE ENERGY CONTRACTS (PPAs, CPPAs, FPAs) FIS APPROACH

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INDUSTRY TRENDS AND MARKET DRIVERS Growth in renewable generation has led to a new type of physical power contract: Power Purchase Agreements (PPAs). These long-term agreements provide a stable revenue stream for operators of wind and solar plants while ensuring a predictable return on investment for project financiers. PPAs are critical for project financing, as lenders typically require predictable revenue before funding energy infrastructure. At the same time, organizations can hedge against future electricity price volatility by locking in long-term rates. Many large corporations also use PPAs to procure renewable electricity and reduce their carbon footprint, such contracts are known as CPPAs. PPAs are complex long-term contracts. Structurally, they function as framework agreements with either a fixed or indexed price and typically an as-produced volume profile, though baseload or shaped volumes are also possible. In addition, contractual provisions often allow sellers or buyers to fix or unfix volumes and prices within the agreed framework during specific periods close to delivery. These fixing mechanisms reduce both price and volume risk, particularly in cases where production is uncertain and pricing is indexed. A more recent trend in renewable energy markets is the rapid deployment of Battery Energy Storage Systems (BESS). According to Pexapark’s report Pexapark Renewables Market Outlook 2026 – Pexapark, the growth rate of battery storage installations - both

standalone and co-located with renewable assets - has exceeded the growth rate of renewable generation capacity since 2023. To support battery projects, the market is beginning to adopt Flexibility Purchase Agreements (FPAs). These long-term contracts provide stable revenue streams for battery storage assets, similar to the role PPAs play for renewable generation. FPAs are generally even more complex than PPAs, as they are based on the optimal operational use of a battery and therefore include embedded optimization assumptions, for example regarding market participation, dispatch strategies, and revenue stacking across multiple energy and ancillary service markets.

Managing renewable energy contracts (PPAs, CPPAs, FPAs) – FIS Approach

Another emerging contract structure is the hybrid PPA/FPA contracts, designed for projects where battery energy storage systems are co-located with wind or solar generation. This type of agreement aims to ensure long-term revenues while reducing market and operational risk for integrated renewable-plusstorage assets.

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Hybrid FPAs are adding complexity to typical FPAs or PPAs because they incorporate the optimized operation of the battery alongside the stochastic (weather-driven) production profile of renewable generation. As a result, the contractual framework must account for both battery dispatch optimization and the uncertainty of renewable output, making pricing, risk allocation, and settlement mechanisms significantly more sophisticated.

Managing renewable energy contracts (PPAs, CPPAs, FPAs) – FIS Approach

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COMPLEXITY OF PPAS LIFE CYCLES FROM ETRM VENDOR STANDPOINT The contract life cycle typically begins with complex commercial analysis and negotiations. However, this paper focuses on the operational phase of the deal, as this stage requires dedicated support from Energy Trading and Risk Management (ETRM) systems. The pre-trade phase is generally handled outside the scope of such platforms. Operational support for a PPA starts with the appropriate configuration of the solution landscape, which typically needs to include the following capabilities: • Real-time monitoring and dispatch optimization (in case flexibility assets are involved) • Price index tracking and management of price fixings • Tracking of volume fixings, unfixings and regular updates • Monitoring of actual production/consumption, settlement updates, and other key performance indicators • Integration with scheduling and forecasting systems, as well as with counterparties’ systems that provide fixing information • Mark-to-market valuation, positioning, and hedging • Value-at-Risk (VaR) and other risk calculations • Settlement calculations and invoice reconciliation • Renewable Energy Certificate (REC) and carbon credit accounting Among these processes, fixing and unfixing mechanisms are particularly challenging. For example, several types of volume fixing must be supported, such as horizontal and vertical block fixing (e.g., peak/off-

peak or baseload) and shape fixing. Prices may be fixed outright or indexed to market prices or balancing prices. Additional pricing structure can result from Take-orPay conditions and not fixed volume (auto close of open position). Each fixing structure creates different exposure profiles, which must be tracked and managed separately. For example, some contracts carry only market price risk, while others include both price and volume risk. Additional complexity arises in settlement processes and in the calculation of certificate volumes. Provisional renewable volumes are calculated based on forecasted or nominated production, while the final settlement can only be determined once actual generation data becomes available. Initially, many ETRM vendors treated PPAs as “exotic” or niche products and attempted to model their lifecycle using existing customization capabilities, such as grouping deals through custom attributes, implementing scripting for analytics, and creating tailored reporting structures. This approach works well for portfolios containing only a small number of PPAs.

Managing renewable energy contracts (PPAs, CPPAs, FPAs) – FIS Approach

However, as the number of PPAs has grown and PPAs have become a standard transaction type in renewable energy trading vendors have increasingly moved toward standardized approaches to PPA modelling. Most ETRM systems now offer a “standard customizing” for managing PPAs, where they brought certain level of standardization to the original approach.

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While these implementations may appear smooth in demonstrations, they often still rely on underlying customization layers. As a result, users frequently experience limited transparency and process visibility, and implementing changes to the business model or contractual structures can remain complex and timeconsuming.

FIS SOLUTION FIS has developed a flexible approach to modeling PPAs by combining two solutions for transaction management in energy markets. The first is a traditional ETRM platform, the FIS Energy Trading, Risk and Logistics Platform (ETRLP). The second is FIS Energy Portfolio Management (EPM), which is designed specifically for physical asset–based trading and provides robust time-series management capabilities. By integrating these two platforms, FIS enables customers to manage large and complex PPA portfolios more effectively. Within this architecture, EPM provides detailed insight into physical exposures, while ETRLP acts as the central risk management backbone. Complex deal capture and lifecycle management for PPAs including physical and financial exposure calculations, scenario analysis, optimization, and settlement logic are handled in EPM. Aggregated exposures are then automatically transferred to ETRLP, where hedging and risk management activities take place. EPM includes several features specifically designed to support complex physical agreements, such as PPAs, corporate PPAs (CPPAs), and tranche contracts - power supply agreements in which the contracted electricity volume is hedged or priced progressively in multiple

tranches. Key capabilities that differentiate EPM from many traditional ETRM systems include: • Advanced time-series management EPM supports time-series structures for volumes, prices, and other variables. It allows users to build complex formulas including averaging and time shifts and calculations directly on these time-series datasets. • Flexible book structure The platform supports deep, customizable folder and book hierarchies, with aggregation capabilities across levels. This enables users to maintain a transparent view of fixed tranches, the original deal structure, and remaining unfixed positions across different portfolios.

Managing renewable energy contracts (PPAs, CPPAs, FPAs) – FIS Approach

• Standardized tranche contract framework Building on the two capabilities above, EPM provides a standardized framework for managing tranche-based agreements, which can also be applied to PPAs and CPPAs. The integrated EPM–ETRLP workflow typically follows these steps: Step 1: Deal Capture in EPM Front-office users capture PPAs, CPPAs, renewable contracts, or tranche agreements in EPM, leveraging its time-series framework and built-in support for tranche structures. Step 2: Advanced PPA Lifecycle Management in EPM EPM enriches each contract with a range of operational and analytical capabilities, including: • Time-series management and visualization, delivered through flexible dashboards and drilldown reporting for both prices and volumes • Historization of the volume time series attached to contracts and possibility to visualize each uploaded or calculated volume version • Native contract framework for complex structures, including constraints and flexible fee models • Physical and financial exposure calculations • Hedge optimization • Flexible scenario analysis, and settlement logic This stage also includes risk-based position management. Each fixing event modifies the risk profile of a portion of the original PPA over a given time

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period. For example, a fixing may transform exposure from combined price and volume risk into price-only or volume-only risk, depending on the structure of the fixing. To support this, exposures are differentiated across books and folders representing different risk types. This separation is critical for later aggregation and transfer to ETRLP. The classification is performed using EPM’s flexible book/folder structure, eliminating the need for custom attributes and allowing the structure to evolve easily if business processes change. Step 3: Automated Transfer of Aggregated Positions to ETRLP Using standard REST APIs or secure file-based integration, deal and position data flow from EPM into ETRLP. During this step, EPM performs time-series– based aggregation and provide ETRLP with the following data: • Aggregated volumetric and financial exposures, differentiated by shapes vs. blocks and fixed-price vs. indexed-price positions • Fixing and unfixing parameters • Asset- or TSO-based aggregation structures Step 4: Hedging and Risk Integration in ETRLP Once aggregated exposures are transferred into the ETRM environment, ETRLP enables: • Automated hedging workflows • Consolidated position management • Comprehensive P&L and risk reporting • Alignment between physical and financial trading books

Managing renewable energy contracts (PPAs, CPPAs, FPAs) – FIS Approach

• Advanced settlement and accounting processes Step 5: Hedge Feedback to EPM Executed hedge transactions are then imported back into EPM, ensuring that the physical portfolio view and position calculations remain fully synchronized. Workflow Variations and Extensions Depending on client requirements, variations of this workflow are possible. For example: • EPM can perform hedge optimization, generating hedge proposals for traders as a decision-support tool.

Both EPM and ETRLP are available as cloud-native solutions, which can be deployed in either private or

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• The system can also integrate with counterparty’s portals, where PPA counterparties directly submit fixing information. These inputs automatically trigger position recalculations and portfolio updates within EPM. FIS has recently extended partnerships through EMP (Energy Market Price) integration. This enhancement to the eco system enables customers of FIS clients to seamlessly access the self-service EMP portal. Through this portal, they can manage fixing and unfixing events while benefiting from an intuitive dashboard and valuable market insights.

public cloud environments and fully managed by FIS.

Managing renewable energy contracts (PPAs, CPPAs, FPAs) – FIS Approach

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BENEFITS OF THE SOLUTION The integrated EPM–ETRLP architecture provides several advantages for managing large portfolios of PPAs and CPPAs 1. Targeted, fit-for-purpose solution for PPAs and CPPAs The specialized design of FIS Energy Portfolio Management provides a transparent and structured view of deals and positions. This is particularly valuable for organizations managing large PPA portfolios, where clarity and scalability are essential. 2. Integrated time-series and contract management The platform combines contract logic with highresolution time-series data, allowing physical contract structures and operational data to be managed within a single analytical framework. 3. Simplified calculations without scripting Key calculations, such as position aggregation, weighted average pricing, and exposure metrics can be performed directly within the system without the need for custom scripting. 4. Standardized interface between portfolio management and enterprise risk systems The integration between EPM and FIS Energy Trading, Risk and Logistics Platform (ETRLP) is provided as a standard vendor-supported interface, ensuring reliable data exchange between the PPA management environment and the central risk management system. 5. Comprehensive risk management capabilities ETRLP provides comprehensive risk management,

calculating risk indicators across both physical and financial portfolios. 6. Cloud-native architecture Both solutions are delivered as cloud-native platforms, enabling scalable deployment and modern infrastructure management. 7. Flexibility for more advanced contract structures The flexibility and built-in optimization capabilities of EPM also allow the modelling of more complex structures, including FPAs and hybrid renewable– storage contracts, discussed further in the next section. Addressing Potential Concerns About a DualSystem Architecture Offering two interconnected platforms rather than a single system may raise concerns, particularly for organizations that are not accustomed to ecosystems of solutions. However, several factors mitigate these concerns: 1. Alignment with organizational structures Companies with large PPA or CPPA portfolios often manage these activities within a separate business unit or profit center, distinct from traditional trading operations. Even where the separation is less formal, teams responsible for managing long-term renewable contracts typically operate separately

Managing renewable energy contracts (PPAs, CPPAs, FPAs) – FIS Approach

from those focused on pure trading or financial risk management. As a result, users generally interact only with the system relevant to their function. 2. Interface management handled by the vendor Most organizations operate multiple interconnected systems, and managing interfaces is usually the responsibility of internal IT teams. In the case of the EPM–ETRLP integration, the interface is fully maintained by FIS, reducing operational complexity for the client’s IT department. 3. Managed infrastructure options Concerns about a potentially complex IT architecture can also be addressed through hosting and Application Managed Services (AMS) provided

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by FIS, which can manage the operational footprint of the solution. 4. Scalability depending on portfolio size The integrated EPM–ETRLP approach is particularly beneficial for companies with large PPA or CPPA portfolios. For organizations managing only a small number of PPA contracts, these deals can still be handled directly within ETRLP using the system’s customization capabilities, similar to the approach commonly used by many traditional ETRM vendors. Alos for industrial clients managing only PPA’s with no need for complex ETRM solution, EPM can serve as the right tool to managing the portfolio and all front-to-back processes.

FLEXIBILITY TO MANAGING FPA AND HYBRID CONTRACTS Flexibility Purchase Agreements (FPAs) and hybrid renewable–storage contracts are currently among the fastest-growing contract types in renewable energy markets and are becoming increasingly relevant for ETRM solution providers. Under an FPA structure, the offtaker commits to monetizing the operational flexibility of BESS while providing the asset owner with a fixed or guaranteed revenue stream. Revenues under FPAs are typically structured through mechanisms such as: • Tolling agreements • Price floor arrangements • Financial swap structures

Another approach to monetizing BESS assets involves short-term trading on wholesale electricity and ancillary service markets. In this model, a trading company (the offtaker) signs an agreement with the BESS owner or operator to optimize the asset’s operation across multiple revenue streams. The trader operates the battery to maximize market revenues and typically shares the resulting profits with the asset owner.

Managing renewable energy contracts (PPAs, CPPAs, FPAs) – FIS Approach

This optimization and short-term trading driven model has been one of the most common monetization strategies for BESS assets in recent years. This model is, however, generally less relevant for ETRM platforms, since traders often rely on specialized optimization and (algo) trading software for short-term market trading. In such setups, only aggregated end-of-day positions are transferred into the ETRM system for risk and accounting purposes. FPAs are changing this dynamic for ETRM vendors. Because FPAs are long-term contractual agreements that incorporate embedded optimization logic, they require more direct lifecycle and exposure management within trading and risk systems. Under an FPA or hybrid renewable-plus-storage contract the offtaker operates

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the BESS to maximize long-tern trading revenues, either retaining the upside or sharing the gains with the asset owner, depending on the contractual structure. From the perspective of FIS, supporting FPAs does not require fundamental architectural changes to the existing solution landscape. FIS Energy Portfolio Management already supports the management of flexible production assets with embedded optimization capabilities, as well as hedge optimization workflows. With targeted enhancements to the optimization algorithms and analytical components, the integrated FIS Energy Portfolio Management and FIS Energy Trading, Risk and Logistics Platform environment can fully support the lifecycle management of FPA and hybrid renewable–storage contracts.