Traditionally, merchant power plants are those that sell power into competitive wholesale markets and are financed by investors. This is in contrast with either rate-base financed plants (which are paid off through utility bills over a long time horizon) or PPA-financed plants (which have a contract with an offtaker who agrees to pay a certain price for power over a period of time). As such, merchant plants are exposed to a different kind of risk than these other power plants, both in terms of the volume of electricity they sell (or demand) and the price of that electricity.
For the purposes of this article, the definition of “merchant power” will be broadened to include projects that face these same risks — where the price of electricity is indexed to the spot market in some fashion, even if the mechanisms for that sale aren’t directly on the \”competitive market.”
via Does Merchant Solar Make Any Sense? : Greentech Media.
Categories: Electricity, Energy