HOW LTESAS WORK
LTESAs reduce investor risk from unexpectedly low wholesale electricity prices while maintaining their exposure to upside where electricity prices are higher
The LTESA achieves this by providing project operators with a series of options to access cash flows for distinct periods, over a long contract term. These cash flows are called a “strike price”, which projects compete on through our tender process. Unlike traditional Contracts for Difference, LTESAs provide projects with flexibility to utilise power purchase agreements and wholesale contract markets to opportunistically hedge their electricity price risk. The additional security of the LTESA insurance may also increase the range of counterparties with whom suppliers are willing to trade on the wholesale contracts market. This reduces the likelihood that projects exercise their LTESA options.