Power Purchase Agreement (PPA) 101

A Power Purchase Agreement (PPA) is a legal contract between an electricity generator and a purchaser of energy or capacity (power or ancillary services).

Such agreements play a key role in the financing of electricity generating assets.

  • Under the terms of a PPA, the PPA provider typically assumes the risks and responsibilities of ownership when it purchases, operates, and maintains the turn-key facility.
  • By clearly defining the output of a generating asset and the credit of its associated revenue streams, a PPA can be used by the owner of the asset to raise non-recourse financing[1]from a bank or other financing counterparty.[2][3]
  • Commercial PPA Providers such as SunEdison, MMA Renewable Ventures, Solar Power Partners, and Recurrent Energy are enabling businesses, schools, governments, and utilities to benefit from predictable, renewable energy through a PPA.
  • Other Solar Electricity Providers include SunRun, Solar City, Tioga Energy.

Source Wikipedia

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