There are many factors that go into setting premiums for renewable energy projects. One of the most important is the type of renewable energy resource being used. Some resources like solar and wind are more variable than others and may not be available when needed most. This variability can be addressed through a variety of mechanisms including storage demand management and integration with other generation sources.
The type of contract for the energy purchase agreement (PPA) is also important. For example a long-term contract with a high price may provide more certainty for financing but may not be the best option for the consumer. A shorter contract with a lower price may be more attractive to the consumer but may not provide the same level of certainty for the developer.
The location of the project is also important. Some locations are better suited for certain types of renewable resources. For example solar PV works best in locations with high levels of solar insolation while wind energy is best in locations with good wind resources.
The political and regulatory environment in the location of the project is also important. Some jurisdictions have more favorable policies for renewable energy than others. This can make a big difference in the economics of a project and can be a major determinant of whether or not a project is viable.
Finally the specific characteristics of the project such as size capacity factor and technology will also affect the price of the electricity.
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