THE POWER PURCHASE AGREEMENT (PPA)
The Power Purchase Agreement is the central contract for any independent power generation project. It is an instrument intended to facilitate the sale and purchase of electrical power. A PPA is a contract between two parties, one who produces or sells for sale (the seller / producer / project company) and one who seeks to purchase (the buyer / off taker). During the negotiation process, the PPA draft can include the key items such as tariff, technology and location. Usually, the initial draft has been prepared, the producer and the off taker is ready to negotiate the various provisions. Also, the draft of the PPA can come from the producer or the off taker, but is typically generated by the off taker. The off taker should seek the advice of qualified counsel when preparing the PPA. Finally, the main obligation of the buyer under the PPA is to pay the agreed tariff, then the seller’s responsibilities are to build, operate, and maintain the power plant in accordance with applicable law.