Power purchase agreements (PPAs)—key terms and issues
Produced in partnership with Pinsent Masons
Power purchase agreements (PPAs)—key terms and issues

The following Energy practice note produced in partnership with Pinsent Masons provides comprehensive and up to date legal information covering:

  • Power purchase agreements (PPAs)—key terms and issues
  • What is a power purchase agreement?
  • Commencement and term
  • Sale of power
  • Sale and transfer of renewable benefits
  • Forecasting, maintenance and outages
  • Change in law
  • Credit support
  • Force majeure
  • Extensions
  • More...

What is a power purchase agreement?

A power purchase agreement (PPA) is a contract between an electricity generator (generator) and the party who is purchasing the power (offtaker) which incorporates the commercial terms for the sale and purchase of electricity for a project. For details of our full suite of resources and precedents on power purchase, see: Power purchase agreements and routes to market—overview.

The PPA provides a route to market for the electricity generated by the generator and, in the case of renewable energy generating stations, any green benefits that the generator receives for generating electricity from renewable sources and that may be sold to electricity suppliers. The PPA is the contract pursuant to which a large proportion (if not all) of a project's revenues are earned and consequently the PPA underpins the economics of most power projects.

The majority of PPAs will contain provisions dealing with the following issues:

  1. commencement and term

  2. sale of power

  3. sale and transfer of any green benefits (for projects generating electricity from renewable sources)

  4. forecasting, maintenance and outages

  5. change in law

  6. credit support

  7. force majeure, and

  8. extensions of the generating station

For further information on the issues that commonly arise during the negotiation and drafting of PPAs entered into between a renewable generator and a licensed electricity supplier, see Checklist: Power purchase agreement (PPA)—Checklist, although many of these issues would

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