Power purchase agreement (PPA)—Checklist

The following Energy practice note provides comprehensive and up to date legal information covering:

  • What is/check the duration of the agreement?
  • What is/check the export volume?
  • What is/check the value of the renewable benefits?
  • Check the definition of power price is appropriate
  • What is commercial re-exclusivity?
  • Check the long-stop dates for construction of the plant and registration of the supply point
  • Consider whether output forecasts are appropriate
  • Consider meter accuracy and access rights
  • Termination and breakage costs
  • Check whether a guarantee provision is required
  • More...

What is/check the duration of the agreement?

The term of the power purchase agreement (PPA) should coincide so far as practicable with the terms of any loans used to finance the project. It is often calculated from the point where the plant becomes commercially operational, although the PPA will usually come into effect before this to ensure funder certainty and also because there will be provisions dealing with late commissioning.

What is/check the export volume?

There is normally a minimum contracted volume of electricity that the plant is required to export for sale to the supplier. This may have percentage tolerances attached to it for over- and under-production, and moving outside of these tolerances may affect the power price (typically by way of a reduction, to incentivise a reliable volume of production).

What is/check the value of the renewable benefits?

There are normally provisions requiring the generator to maintain any accreditations necessary to be eligible for renewable benefits. The generator is also usually required to obtain the necessary accreditations, etc to become eligible for new or replacement benefits applicable to the power station. In some instances, these obligations may be limited so that there is no requirement to incur unreasonable or material costs in order to obtain the new or replacement benefit.

Check the definition

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