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:

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

| Term | Define | |---|---| | Contract Capacity | MW/kW, net of parasitic load | | Delivered Energy | kWh/MWh measured at delivery point | | Net Output | Adjustments for losses/auxiliary load | | Commercial Operation Date | Objective tests and certification criteria | | Force Majeure | Scope, exclusions, duration caps | | Availability | Calculation formula and exclusions | | REC/Environmental Attributes | Registry, certification, transfer mechanics |

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:

| Model | Key Inputs | |---|---| | Fixed energy price | $/MWh, escalator, start date | | Indexed price | Index, reset frequency, floor/ceiling | | Time-of-delivery | Peak/off-peak bands, seasonal tables | | Capacity + energy | Capacity payment, availability test | | Pay-as-produced | Output-based with curtailment rules |

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

| Metric | Measurement | Remedy | |---|---|---| | Availability (% annual) | Defined formula | LDs per shortfall | | Energy guarantee (MWh/period) | Net Delivered | LDs or make-whole | | COD delay (days late) | Milestone dates | LDs per day |

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.