Power Purchase Agreement (PPA)

Power Purchase Agreement (PPA)

Produces a commercially balanced, regulation-aware agreement for the sale and purchase of electric energy between a generator and an offtaker.

Quick Start

Gather before drafting:

1. Parties — legal names, jurisdictions, signatory authority, guarantors.
2. Project — facility type, location, capacity (MW), technology, COD targets, interconnection status.
3. Delivery — delivery point, ISO/RTO or utility territory, scheduling/dispatch model.
4. Commercial — term length, pricing model, escalators, payment cycle, taxes.
5. Attributes — REC/carbon ownership, transfer mechanics, certification requirements.
6. Risk — curtailment allocation, force majeure, change-in-law, credit support, insurance.
7. Operations — metering standards, testing cadence, data interfaces.
8. Finance — lender requirements, step-in rights, consent rights (if project-financed).

Drafting Skeleton

1. Parties; Recitals
2. Definitions and Interpretation
3. Term; Conditions Precedent
4. Sale and Purchase; Delivery; Scheduling
5. Pricing; Invoicing; Taxes
6. Metering; Measurement; Data
7. Environmental Attributes
8. Representations and Warranties
9. Covenants; Reporting; Compliance
10. Performance Standards; Liquidated Damages
11. Events of Default; Remedies
12. Force Majeure
13. Insurance; Credit Support
14. Termination; Consequences
15. Dispute Resolution; Governing Law
16. Miscellaneous
Exhibits A–E

Core Workflow

1. Key Definitions

Define these precisely — they drive pricing, performance, and defaults:

2. Conditions Precedent

Set deadlines for each; specify consequence of non-satisfaction:

• Permits/licenses obtained and in force
• Interconnection agreement executed
• Construction milestones met; COD evidence delivered
• Insurance with required endorsements in place
• Credit support posted and accepted
• Regulatory approvals (if applicable)

3. Pricing Model

Select one and fully specify:

4. Metering and Data

• Accuracy requirement (e.g., ±0.5%)
• Calibration frequency and standards
• Data delivery method and timing
• Dispute process and true-up timeline
• Loss factor allocation between POI and delivery point

5. Performance and Liquidated Damages

LDs must be a reasonable pre-estimate of loss, not a penalty.

6. Default and Remedy Framework

• Cure periods by type: payment (short), non-monetary (longer), insolvency (none)
• Termination rights and effective-date mechanics
• Damages: cover costs, replacement power, termination payment calculation
• Lender step-in/cure rights (only if finance structure requires)

7. Exhibits (minimum set)

• A — Facility description, POI, single-line diagram
• B — Pricing tables, escalation schedule, example invoices
• C — Metering specs, testing protocol, data format
• D — Form notices, designated recipients
• E — Credit support forms (LOC/guarantee)

Pitfalls and Checks

• [VERIFY] jurisdiction-specific regulatory approvals, ISO/RTO tariffs, and interconnection rules before finalizing.
• Align REC/carbon transfer language with registry requirements and buyer compliance targets.
• Keep curtailment rights symmetrical or clearly allocated — avoid implied take-or-pay conflicts.
• Tie COD, availability, and performance tests to objective, auditable criteria.
• Ensure delivery point definitions are consistent across main body and exhibits.
• Match confidentiality/announcement clauses to financing and regulatory disclosure obligations.