--- title: "Merchant or structured offtake?" url: https://frekansenerji.com/en/insights/merchant-or-structured-offtake/ lang: en description: "The choice between taking price risk and fixing it depends on the asset’s financing structure and risk appetite." datePublished: 2026-10-06 dateModified: 2026-10-06 --- # Merchant or structured offtake? The choice between taking price risk and fixing it depends on the asset’s financing structure and risk appetite. Power Markets 11 min read · October 6, 2026 ## 69% in four months In December 2025 the monthly average PTF was 2,973 TL/MWh. Four months later, in April 2026, it was 921 TL/MWh. The same plant with the same output earned less than a third per MWh in spring than in winter. That volatility sums up the reality of every renewable plant selling into the market. Figure 1 Monthly average PTF ![Frekans Enerji](/_ds/frekans-design-system-4d9ac81c-c3eb-4c27-a344-ef6c4ece4cc2/assets/logos/frekans-full-blue.svg) Dec 2025 2,973 Jan 2026 2,895 Feb 2026 2,078 Mar 2026 1,620 Apr 2026 921 TL/MWh. Source: EPİAŞ Transparency Platform. The investor’s question is whether to carry that risk. A merchant plant keeps all the upside but also bears all the downside. A structured offtake agreement passes some or all of that risk to a counterparty, for a price. The right answer depends less on a market view than on the asset’s financing structure and its owner’s capacity to carry risk. Most of the costliest mistakes I have seen in more than twenty years came not from getting the price wrong but from trying to carry a risk that could not be carried. ## How the market works in Türkiye 60.5% Share of bilateral contracts in wholesale power trading, 2025 37.9% Share of day-ahead and intraday 84% Solar sales-weighted price as a share of the market average, 2025 99% The same ratio for wind About 60% of wholesale power trading in Türkiye is done through bilateral contracts. Most of these, however, are short-term deals between generators and suppliers, often indexed to PTF. Long-term, fixed-price corporate PPAs in the European sense are still few. Hedging tools are thin as well. Volume on EPİAŞ’s Electricity Futures Market is a very small fraction of total trading, and baseload futures on Borsa İstanbul VIOP have limited depth beyond a few months. Hedging a solar plant’s five-year price risk on exchange is not practical today, so long-term price fixing is met through bilateral contracts. ## Types of structured agreement “Structured offtake” is not a single product. Structures differ widely in how the price is set and which risk stays with whom. | Structure | Price | Risk kept by plant | Risk passed to buyer | | --- | --- | --- | --- | | PTF-indexed discount | Hourly PTF less a fixed percentage or amount | All price risk | Imbalance and operations | | Fixed price, pay-as-produced | Fixed price per MWh | Volume risk | Price and profile risk | | Fixed price, baseload | Fixed price for a fixed hourly volume | Price, profile and volume risk | Price risk on the fixed volume only | | Floor | PTF, never below a floor; premium paid | Premium cost | Price risk below the floor | | Collar | PTF bounded between floor and cap | Price risk inside the collar | Price risk outside the collar | For solar, the distinction that matters most is pay-as-produced versus baseload. A solar plant under a baseload contract has to buy the energy it does not produce at night and in the evening from the market. Those are the most expensive hours of the day, so a baseload price that looks attractive on paper can lose money in practice. > For a solar plant, a baseload contract means being short the evening peak. ## An example: a 10 MW solar plant, three scenarios Take a 10 MW solar plant producing about 16,000 MWh a year. Set three scenarios for the price in solar hours: low 1,500, base 2,200 and high 2,900 TL/MWh. Compare four structures: merchant, a 2,000 TL/MWh fixed price, a 1,700 TL/MWh floor with a 100 TL/MWh premium, and a 1,800–2,600 TL/MWh collar. Figure 2 Net revenue per MWh by scenario ![Frekans Enerji](/_ds/frekans-design-system-4d9ac81c-c3eb-4c27-a344-ef6c4ece4cc2/assets/logos/frekans-full-blue.svg) Low scenario Base scenario High scenario Merchant 1,500 2,200 2,900 Fixed price 2,000 2,000 2,000 Floor (with premium) 1,600 2,100 2,800 Collar 1,800 2,200 2,600 TL/MWh. Illustrative calculation. Fixed price assumed about 9% below the base scenario. Floor shown net of premium. Imbalance and service fees not included. Table 1 Annual revenue, 16,000 MWh | Structure | Low (TL m) | Base (TL m) | High (TL m) | | --- | --- | --- | --- | | Merchant | 24.0 | 35.2 | 46.4 | | Fixed price | 32.0 | 32.0 | 32.0 | | Floor (with premium) | 25.6 | 33.6 | 44.8 | | Collar | 28.8 | 35.2 | 41.6 | The table shows what each structure buys. A fixed price gives up 3.2 million TL a year in the base case and gains 8 million TL in the low case. A floor pays 1.6 million TL of premium in every scenario but keeps almost all the upside. A collar needs no premium; it pays for the floor by giving up the cap. ## The financing side: debt is sized on the downside Lenders size debt not on the base case but on cash flow in the downside case. The real value of fixing the price is therefore not a higher expected revenue but a higher downside revenue. In the example, downside merchant revenue is 24 million TL and fixed-price revenue 32 million TL. If debt capacity is set on downside revenue, the fixed-price structure can carry about 33% more debt. That can move equity returns far more than the price itself. In Türkiye there is a tenor mismatch here. Lenders want long-term revenue certainty for 7–10 year debt, while in our experience most corporate buyers are reluctant to commit to a price beyond three years. Laddered contracts, renewal options and intermediation by financial institutions are increasingly used to bridge the gap. ## Items specific to Türkiye | Topic | Why it matters | How contracts handle it | | --- | --- | --- | | Currency and indexation | A fixed TL price loses real value with inflation and FX moves. | Indexation to CPI, PPI or FX; periodic price review. | | Regulatory risk | Price cap, imbalance coefficients and tariffs change often. | Change-in-law clause; renegotiation triggers. | | Counterparty risk | The buyer’s credit quality can change over a long term. | Bank guarantee, parent guarantee, rating thresholds. | | YEK-G certificates | Carry value for Scope 2 reporting and exporters under CBAM. | Price the certificate separately from energy; set a transfer schedule. | | Imbalance | Direction-based coefficients have raised the cost. | Who bears imbalance and who owns forecasting duties. | Currency is the most critical of these. In a high-inflation period a fixed TL price can become meaningless in real terms within a few years, while an FX-based price does not match the buyer’s TL revenue. In practice most agreements settle somewhere between, with partial indexation and periodic review. With CBAM entering its definitive period in 2026, certified renewable energy has become a commercial matter for industrial companies exporting to the EU. It is the most concrete driver of demand for long-term corporate offtake in Türkiye. ## Not all or nothing The choice between merchant and fixed price is not binary. The structure we recommend most often is to fix part of the output, leave the rest in the market, and ladder the fixed share by tenor. Table 2 Laddered hedging example | Delivery year | Share fixed | Left in the market | | --- | --- | --- | | Year 1 | 70% | 30% | | Year 2 | 50% | 50% | | Year 3 | 30% | 70% | The ladder rolls every year: when a year passes, a new third year is added and the shares shift. The price is fixed over time rather than at a single point. You never catch the best price, but you are never caught at the worst price with all your output. Three things set the size of the fixed share: the minimum revenue debt service requires, the plant’s generation uncertainty (a solar plant’s annual output can deviate a few percent from the average), and the investor’s appetite for the remaining risk. Committing to sell energy at a fixed price that you may not produce simply turns price risk into volume risk. ## A different question for batteries For storage the question is framed differently. A battery’s revenue depends on price spreads, not price levels, so a fixed-price energy contract does not cover its risk. Structured revenue for a battery takes the form of tolling or a revenue floor: the counterparty buys the right to use the battery for a fixed fee, or guarantees that annual revenue does not fall below a floor. ## The investor’s view The right structure starts not with “will prices rise?” but with “what happens if they fall?”. For an investor with no debt, a diversified portfolio and tolerance for cash flow volatility, merchant exposure can create more value over time. For an investor financing a single asset with debt or relying on its cash flow, fixing the price is often a necessity. In summary 01 Merchant revenue can move more than 60% within a few months; the monthly average PTF fell 69% between December 2025 and April 2026. 02 With thin futures markets, long-term price fixing in Türkiye is done through bilateral contracts. 03 For solar, pay-as-produced versus baseload is critical; baseload creates a short position in the evening peak. 04 The real value of fixing the price is a higher downside revenue, which directly sets debt capacity. 05 Partial, laddered hedging usually beats an all-or-nothing approach. At Frekans we compare merchant, fixed-price and floor structures for each asset on the same scenario set and size the fixed share to the investor’s financing structure. In agreements with corporate buyers we structure price, indexation and YEK-G together. Sources EPİAŞ 2025 Annual Report EPİAŞ Transparency Platform — PTF and solar sales-weighted price data Borsa İstanbul VIOP electricity futures; EPİAŞ Electricity Futures Market Investment Office of the Presidency, Energy Sector Report 2026 EU Carbon Border Adjustment Mechanism (CBAM) regulation [All insights](https://frekansenerji.com/en/insights/) [Talk to our team](https://frekansenerji.com/en/contact/) Newsletter ## Market analysis in your inbox Clearing prices, regulatory changes and storage economics. We send it when there is something worth reading, and you can unsubscribe at any time. Business email \* Topics I consent to receiving bulletins and analyses from Frekans by email under the [commercial electronic message notice](https://frekansenerji.com/en/legal/#eti). I have read the [KVKK Privacy Notice](https://frekansenerji.com/en/legal/#kvkk). You can unsubscribe free of charge at any time via the link in each email, through İYS or by writing to bilgi@frekansenerji.com. 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