PPA Revenue Escalation Merchant Tail Calculator

Purpose and model boundary

This model builds a ten-year energy-revenue schedule with capacity factor, availability, cumulative degradation, curtailment, contracted share, PPA term, contract pricing, merchant pricing, curtailment compensation, and a separately reported merchant tail.

It is a revenue-scenario model, not a market forecast, dispatch model, offtake agreement interpretation, resource assessment, valuation, financing recommendation, or guarantee. All operating factors, prices, terms, shares, and compensation assumptions are supplied by the user.

Inputs and units

Nameplate capacity is in MW, time is hours per year, energy is MWh, prices use one user-consistent currency per MWh, and revenues use the corresponding currency. The full-width annual grid contains exactly ten positional years with capacity factor, availability, annual degradation, contracted share, curtailment, entered contract price, and entered merchant price.

Contract price can follow an initial price with annual escalation or the entered annual path. Merchant price can follow an initial price with annual growth or its entered path. Curtailment can be uncompensated or compensated at contract price. The PPA term is 2, 3, 5, 7, or 10 years.

Governing relationships

Let D_t be the cumulative retained output after degradation. The workbook compounds degradation by year:

D_1 = 1 - degradation_1

D_t = D_(t-1) × (1 - degradation_t)

Generation before curtailment is:

Pre-curtailment MWh_t = Nameplate MW × Hours/year × Capacity factor_t × Availability_t × D_t

Curtailed MWh_t = Pre-curtailment MWh_t × Curtailment_t

Delivered MWh_t = max(0, Pre-curtailment MWh_t - Curtailed MWh_t)

For an escalated path, the year-t contract price is:

Contract price_t = Initial contract price × (1 + contract escalation)^(t - 1)

The merchant growth route uses the same compound form with merchant inputs. Entered-path modes use the corresponding grid price instead.

During the PPA term:

Contracted MWh_t = Delivered MWh_t × Contracted share_t

After term, contracted MWh is zero. Merchant MWh is delivered MWh less contracted MWh. Revenue is:

Contract revenue_t = Contracted MWh_t × Contract price_t

Merchant revenue_t = Merchant MWh_t × Merchant price_t

In compensated mode during the term:

Compensation_t = Curtailed MWh_t × Contracted share_t × Contract price_t × Compensation percent

Total project revenue is contract revenue plus merchant revenue plus compensation. Merchant-tail revenue includes merchant revenue only after the selected PPA term.

Calculation sequence

1. Validate price routes, curtailment route, PPA term, scalar bounds, and all ten positional rows.
2. Compound annual degradation and calculate generation before curtailment.
3. Calculate curtailed and delivered MWh.
4. Select escalated/grown or entered contract and merchant prices.
5. Split delivered MWh between contract and merchant routes during the PPA term; route all delivered volume to merchant after term.
6. Calculate contract revenue, merchant revenue, and any eligible curtailment compensation.
7. Sum generation and revenue, isolate merchant-tail revenue, calculate realized price and contract-revenue share, and read year-ten revenue.
8. Populate the contract-versus-merchant chart, test energy and revenue closure, and evaluate status.

Outputs and interpretation

Headline generation outputs are cumulative pre-curtailment and delivered MWh. Revenue outputs include contract, merchant, total project, and merchant-tail revenue. Supporting results report curtailed MWh, compensation, average realized price, ending annual revenue, and contract-revenue share.

Average realized price is total revenue including compensation divided by delivered MWh, or zero when delivery is zero. Contract-revenue share excludes compensation from the contract-energy numerator. The chart compares contract and merchant revenue by year and makes the transition to merchant exposure visible.

Validation and status logic

The workbook evaluates status in this order:

Energy closure requires pre-curtailment generation to equal delivered plus curtailed generation within 0.000000001 × max(1, total pre-curtailment generation). Revenue closure applies the same relative tolerance to total revenue versus contract, merchant, and compensation components. The workbook has no CHECK state.

Assumptions and limitations

• Annual degradation compounds multiplicatively and applies before curtailment.
• Contracted share applies only through the selected PPA term. All delivered volume after term is merchant tail.
• Revenue is quantity times user-entered price. The model performs no inflation-index, foreign-exchange, settlement, basis, or capture-price adjustment beyond the selected paths.
• Curtailment compensation is a simple eligible-volume fraction and does not interpret contract language.
• Hourly shape, negative prices, congestion, imbalance, renewable certificates, capacity payments, ancillary services, operating costs, and tax credits are excluded.
• The merchant price path is a user scenario, not a market forecast.
• All shipped operating, price, contract, and curtailment values are synthetic illustrations.

Restrictions and non-computing states

The grid must contain exactly ten complete rows, with year equal to row position 1 through 10. Capacity factor, availability, annual degradation, contracted share, and curtailment are from 0 through 1. Entered prices are nonnegative. Nameplate capacity is positive, hours are from 1 through 8,784, and compensation percent is from 0 through 1. Annual price escalation and merchant growth are from -0.5 through 1.

Zero prices, zero operating factors, or full curtailment are valid and may produce zero revenue. Inactive entered price paths remain part of the fixed grid but are ignored when their scalar growth route is selected. Entries outside the published limits or with an invalid grid shape are rejected before calculation; an in-range year in the wrong row returns workbook NOT VALID.

Errors and warnings

A rejected entry means the submitted values did not meet the published rules for options, types, limits, or fixed-grid shape. Workbook NOT VALID distinguishes an unsupported/incomplete input state from derived generation or revenue arithmetic failure. There is no workbook CHECK state. A connection or calculation-service failure is not an energy or revenue finding. OK confirms arithmetic closure, not production, price realization, or contract enforceability.

Wholesale market and bilateral-contract context follows the Federal Energy Regulatory Commission Energy Primer. Public context on factors affecting electricity prices follows the U.S. Energy Information Administration. No market price, forecast, PPA term, source chart, or external dataset is embedded.