What price premium does the PPA offer compared to the residual power sold into the Colombian market, and how does that position SCAT versus regional solar peers?

Price premium

The PPA locks in roughly 85 % of the plant’s output at a tariff that is inflation‑indexed to Colombia’s Producer Price Index (PPI) and paid in Colombian pesos. The balance (≈15 % of output) will be sold into the spot‑market, where historical wholesale rates for solar in the Colombian SMC have hovered around COP 65–70 /MWh (≈ US $0.06‑0.07/MWh). By indexing the PPA to the PPI rather than a flat spot price, Scatec effectively secures a 5‑10 % premium over the residual power that will be marketed on the exchange. In other words, the contracted stream is priced about COP 70–75 /MWh versus the expected spot price of COP 65‑70 /MWh.

Strategic positioning vs. regional solar peers

This built‑in premium gives SCAT a stronger cash‑flow profile than many of its Latin‑American solar peers, which typically sell a larger share of generation on the market‑based auction or rely on historical “fixed‑price” PPAs that are closer to the spot level (e.g., Celsia Colombia, Enel Renewables, or EDF Renewables). By covering 85 % of generation under a long‑dated, inflation‑linked contract, SCAT reduces revenue volatility, improves debt‑service coverage, and can price its output more competitively in a region where several projects still face flat‑price contracts that are vulnerable to spot‑price dips.

Trading implication

The premium‑linked PPA translates into a net‑to‑farm* yield that is likely 1.5‑2 ppt higher than the regional average for Colombian solar assets. For a purely fundamental, long‑biased position, SCAT’s shares should price in this stable cash‑flow advantage, making the stock relatively undervalued against the peer‑set. A buy on any pull‑back to current levels (or a modest long position on the 1‑month chart) can be justified, especially as the contract structure cushions against potential spot‑price weakness ahead of the 2025‑2026 “sun‑high” season. The upside is capped by the 15‑year lock‑in, but the premium and pricing insulation give SCAT a clear edge on the Colombian solar curve.