Power Purchase Agreement (PPA)
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Power Purchase Agreement (PPA)
A Power Purchase Agreement (PPA) is a long-term contractual arrangement between a power generator and an electricity purchaser, typically for renewable energy projects. Under this agreement, the generator commits to supplying electricity at a predetermined price for a defined tenure.
PPAs define key commercial and technical terms including energy delivery, pricing structure, contract duration, and performance obligations—providing predictable energy costs for the buyer and stable revenue for the generator.
By reducing financial risk and enabling long-term planning, PPAs support project financing and accelerate the deployment of clean energy infrastructure. They also help organizations meet sustainability goals while managing energy cost volatility.