Power Purchase Agreements (2 days)

Agreements between a power generator and a grid operator, trader or consumer to sell and purchase energy. A PPA is one of the most crucial documents, since most new power plants are financed on the back of a PPA.

1. Introduction

2. Economic Terms

  • The underlying economic terms in a PPA: term, tariff, traiff during commission, penalties, currency, indexation, billing cycle, capacity cap, operator curtailment. How a tariff is negotiated.

3. Risks addressed in a PPA

  • The PPA is also a risk management tool that can address a number of risks including market risk (volume and price), interconnection risk, changes in law, force majeure, currency risk, default of either party, technology risk.

4. Financing of Projects with a PPA

  • Discussion of principles of financing power plants including lending and investment decisions.
  • What makes a power purchase agreement "bankable"?
  • Linkage of power purchase agreement with other contracts such as direct financing agreement.
  • Re-financing and PPA provisions.

5. Dispute Resolution and Termination

  • Multi-tier dispute resolution framework for timely resolution.

6. Technical and Operational Issues

  • Provisions in the PPA that refer to technical standards, performance of the plant and operation.

7. Beyond PPA

  • This chapter looks at a number of issues that help put a PPA into context of a power plant project: PPAs in different markets (UK, South Africa, USA), conditions precedent in PPA with links to other agreements and environmental attributes. We also highlight potential alternatives to PPAs.

During the workshop we will be examining power purchase agreements to link the course content to practice.

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