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Renewable Energy Glossary

Renewable Energy Glossary

Welcome on the glossary page of the knowledge hub. Here you find an overview of common terms in the context of energy markets and virtual power plants.

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Knowledge / Virtual Power Plant / Renewable energy / Electricity market / Balancing Energy

Sector Coupling: What is it & where do we stand?

What Is Sector Coupling?Definition

Sector coupling has become kind of a buzzword in European energy businesses. Most commonly, it means replacing the traditional separation of the energy sectors of electricity, heating and cooling, transport and industrial consumption processes in favor of a holistic approach.

Sector coupling aims at decarbonizing the national economy by converting the energy supply as completely as possible to electricity, finally reaching an "All Electric Society". A prerequisite for this is the use of the complete flexibility potential of producers and consumers as well as the storage of energy in its various forms.

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Knowledge / Renewable energy / Electricity market

Merit Order Curve

What is the merit order curve in the power system?Definition

In the energy industry, the term ‘merit order’ describes the sequence in which power plants are designated to deliver power, with the aim of economically optimizing the electricity supply. The merit order is based on the lowest marginal costs. Power exchange markets are operated by a middleman to whom generators and consumers submit their bids. In Belgium, the intermediate party for both the day-ahead and the intra-day market is EPEX Spot Belgium. As discussed in the section on energy markets, the day ahead market is a power exchange market, while the intraday market is an organized over the counter market. The mechanism to determine the clearing price and volumes in a power exchange market is based on the merit order curve.

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Knowledge / Electricity market / Power trading / Renewable energy

Power market players

Which players are active on the power market?

The liberalised electricity market includes many parties who all have to work together and at the same time try to make a profit. An overview of the most important players in our current system is given below.

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Knowledge / Electricity market / Renewable energy / Power trading

What is a Power Purchase Agreement (PPA)?

What is a Power Purchase Agreement (PPA)?Definition

A Power Purchase Agreement (PPA) is a power offtake agreement between two parties, being a (green) electricity producer and an offtaker of this electricity, such as an electricity consumer or trader. A PPA includes all the terms of the agreement, such as the amount of electricity to be supplied, the negotiated price, who bears what risks, the required accounting, and the penalties if the contract is not honored. As it is a bilateral agreement, a PPA can be adapted to the wishes of the parties involved, so the supply contract can take many forms. Electricity can be supplied directly or virtually via a PPA (see below).

Generally, a PPA is a long-term contract, such as ten or fifteen years. It (partially) removes the risk of fluctuations in the electricity markets, which is desirable for large, debt-financed projects. PPAs are also concluded for the continued operation of renewable energy installations when they no longer receive subsidies.

A growth in the number of PPAs is also visible in Belgium. An example is the PPA that Google concluded with Engie for the supply of offshore wind for its data center.

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