The following Energy practice note Produced in partnership with Matthew Collinson provides comprehensive and up to date legal information covering:
In project financed power generation projects, one of the key documents is the power offtake agreement. Typically referred to as a 'power purchase agreement' or PPA, this is commonly a contract between the generator and a licensed electricity supplier for the whole of the plant’s output.
PPAs of this type are commonly on the licensed supplier’s standard terms, which will be familiar to most funders. For our key resources on PPAs, see: Power purchase agreements and routes to market—overview. PPAs should require little amendment despite their bias in favour of the supplier, as this is normal in the market.
Another form of power offtake arrangement is where the generator is directly connected to one or more local customers via a ‘private wire’ and these customers buy their power directly from the power station. In general, ‘private wires’ refers to electricity distribution systems not owned or operated by a distribution network operator (DNO) licensed under the Electricity Act 1989 (EA 1989), s 6. (For ease, post-liberalisation distributors known in the industry as 'independent' DNOs or ‘IDNOs’ are included as DNOs, as the licensing rules (if not the terms of the licences themselves) apply equally.)
Private wire arrangements typically appear in an energy services company (ESCo), community energy and captive offtake projects, and from a regulatory perspective are often more complex than anticipated. These complications typically arise
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