Power Purchase Agreement (PPA)
Consider entering into a power purchase agreement (PPA) for a solar power plant under open access policy.
PPA
What is a Power Purchase Agreement (PPA)?
A Power Purchase Agreement (PPA) is a contractual agreement between an electricity generator and a buyer, typically a company, government entity, or organization. Under this arrangement, the electricity generator, agrees to supply a fixed quantity of electricity to the buyer at a predetermined price over a specified period.
Benefits
Biggest Benefits of Power Purchase Agreements?
As the price is fixed or indexed, it shields the buyer from the volatility of conventional energy prices, providing budget predictability and long-term cost savings.
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PPAs provide a viable framework for businesses, governments, and institutions to access Clean, Reliable, and Cost-Effective Electricity generated from renewable sources.
Sustainable Energy Solutions
Power Purchase Agreement (PPA): A Blueprint for Sustainable Energy Partnerships
In an era where sustainable energy solutions are gaining widespread recognition as the way forward, Power Purchase Agreements (PPAs) have emerged as instrumental instruments in promoting renewable energy adoption. PPAs provide a viable framework for businesses, governments, and institutions to access clean, reliable, and cost-effective electricity generated from renewable sources.
Mechanics of a PPA
Parties Involved
The key players in a Power Purchase Agreement are the electricity generator, which can be a solar farm, wind power plant, or any other renewable energy facility, and the buyer, which is usually a business, utility, or government entity seeking to procure clean energy.
Mechanics of a PPA
Contractual Terms
PPAs generally span long durations, ranging from 10 to 25 years, to provide stability and predictability for both the generator and the buyer. During this period, the buyer agrees to purchase the agreed-upon amount of electricity at a predetermined price, which can be fixed or indexed to a specific market factor.
Mechanics of a PPA
Risk Allocation
PPAs often include provisions for risk allocation between the parties. This may cover issues related to performance, regulatory changes, and force majeure events, ensuring that both parties have a clear understanding of their responsibilities and potential liabilities.