Identification and assessment of risks associated with energy off-take contracts

The national electricity system includes generation plants and transmission and distribution networks required to supply electricity. For the system to function properly, the grid frequency must remain close to 50 Hz within allowed oscillations, ensuring the balance between energy injected into the grid and energy withdrawn. The electricity market is the platform where electricity is traded and prices are formed. At the national level it is managed by Terna, responsible for dispatching, and by the Gestore dei Mercati Energetici, which organizes auctions and wholesale electricity trading. The grid operator ensures that supply and demand remain balanced in real time to maintain system stability. In recent years, the share of non-programmable renewable sources has increased significantly in the Italian energy mix, increasing the variability of electricity supply. This requires greater system flexibility through technologies such as energy storage systems and modern contracts. In particular, Power Purchase Agreements (PPAs), long-term contracts for renewable electricity supply, have become widespread. These off-take agreements regulate transactions between generation plants and buyers, often involving balancing entities such as the Balance Responsible Party, which ensures consistency between scheduled and injected electricity. The work focused on calculating imbalance costs borne by individual production units within off-take contracts. The analysis examined the variables determining imbalance prices, showing that they depend on the quantity of imbalanced electricity and on the remuneration of reserve services used to restore system balance. Simulations were conducted for different plants, evaluating forecasting indicators and comparing the resulting imbalance costs. The results show that larger forecasting errors lead to higher imbalance costs, highlighting the importance of accurate predictive models and risk-hedging mechanisms in long term electricity contracts.