Power Purchase Agreement - Where Appropriate

Where Appropriate

Power purchase agreements (PPAs) may be appropriate where:

• the projected revenues of the project is uncertain and so some guarantees as to quantities purchased and price paid are required to make the project viable;
• protection from cheaper or subsidized domestic or international competition (e.g., where a neighboring power plant is producing cheaper power);
• there is one or a few major customers that will be taking the bulk of the product - for example, a government may be purchasing the power generated by a power plant - the government will want to understand how much it will be paying for its power and that it has the first call on that power, the project company will want certainty of revenue;
• purchaser wishes to secure security of supply.