Andy Archibald, Senior Consultant at Scotwork UK
Most weeks, I observe and analyse negotiations. As a Consultant at Scotwork, a world-leading negotiation consultancy, it’s my job to work with our clients to develop the negotiation skills of their negotiators and navigate complex negotiations.
Any time a negotiation concludes or deadlocks, the first part of the process I analyse is what preparation was done beforehand and was it effective in providing the foundations to a successful outcome – because effective preparation is the foundation of any negotiation and makes it vastly more likely that the outcome will be a successful one.
Sadly, however, all too often the preparation before a negotiation is no more than a bit of number crunching and a strategy consisting of ‘let the other side speak first and we’ll go from there’. Preparation is vital in any negotiation and is the most important step in the negotiation process, including Power Purchase Agreement (PPA) negotiations between businesses and renewable energy generators. It covers a wide agenda of what negotiators must consider in advance. And the more complex the negotiation, the greater the need for effective preparation.
Negotiating PPAs can seem a complex process, with negotiators required to navigate multiple challenges including terminology, regulatory requirements and changes, fluctuating market prices, shifting demand requirements, and many more. This article therefore explores three things those negotiating PPAs can do to be better prepared: doing your research, setting objectives and having a strategy. Effective preparation won’t guarantee success, but it will help mitigate these challenges, enabling you to enter negotiations with confidence.
Do Your Research
The world of PPAs can seem complex and confusing. Do your research and market analysis to understand what you know and what you don’t know before the negotiation begins. Doing so will confirm the information you already have, what information you can gather before the negotiation, what assumptions you are making and what information you need to get from the other side at some point. Information will of course differ whether you are negotiating the buyer or supplier side of the agreement, covering the entire potential structure of the contract, including the expected energy requirement and terms and conditions.
Be Clear on Objectives and Priorities
Before entering negotiations, be clear on the objective you are trying to achieve, what you expect the negotiable variables to be, and what your priorities are. Having a well-defined objective and set of variables allows you to articulate your needs clearly, stay focused during discussions and trade value during the process, avoiding haggling over the most difficult variables, which is usually price.
Determine your Strategy
You know the objective and you know what you know and what you don’t. The strategy is how you are going to achieve your objective and fill in the gaps in your knowledge. Consider the following: How will you manage the negotiation process? How will you structure the other side’s expectations? What is your power in the negotiation and how will you leverage it? What questions will you ask and at what point in the negotiation? Are you going to make the first proposal in the negotiation or invite the other side too? How will you identify and deal with negotiation tactics the other side use? How will you deal with the inevitable obstacles during the process?
Conclusion
While it won’t guarantee you’ll always get everything what you want from your PPA negotiations, effective preparation is the foundation of any negotiation and being prepared is more likely to lead to a successful outcome. Doing the research, being clear on the objective and having a strategy beforehand positions you for favourable outcomes. As the UK continues to transition towards a sustainable energy future, the PPA market will continue to grow and the importance of preparing effectively for these negotiations will only become greater. Invest the time and effort to prepare and you will be better equipped to navigate the complexities of the energy market and forge agreements that meet your strategic goals.
This article appeared in the March 2025 issue of Energy Manager magazine. Subscribe here.
