Power Purchase Agreement
(Utilities)

Summary

This template is a power purchase agreement (PPA) used by utilities that defines the relationship between a Special Purpose Vehicle (SPV), as seller, and the party that buys the electricity that the power plant generates (Buyer). This template contains practical guidance, drafting notes, and alternate and optional clauses. This PPA mitigates market risk by providing guaranteed cash flow through the pre-negotiated sale of a power plant's electrical output. This PPA for utilities outlines all of the terms for the sale of electricity between the two parties, including when the project will begin commercial operation, schedule for delivery of electricity, penalties for under delivery, project finance, payment terms, and termination. This PPA should be made consistent with the other documents which comprise the project documents, including the Engineering, Procurement and Construction Agreement, the Operations and Maintenance Agreement, the Fuel Supply Agreement, and the Interconnection Agreement. The provisions in this PPA are generally applicable in any region/jurisdiction of the world. For more information, see 7204 Oil, Gas & Energy Quarterly and Pratt's Energy Law Report 1.03. For additional guidance, please see Power Purchase Agreements and Renewable Energy Power Purchase Agreements: Parties to the Agreement Video. For more information on power purchase agreements, see Power Purchase Agreement Risks, Power Purchase Agreements in Renewable Energy Projects, Power Purchase Agreement Drafting Checklist, Termination and Cancellation Rights, Drafting Contractual Dispute Provisions Resource Kit, and Key Issues for Project Finance Lenders in Construction Contracts. To compare state and federal laws on transportation of natural gas to downstream electric generation facilities, see the Oil and Gas Transportation via Pipeline topic in the Energy & Utilities State Law Comparison Tool. To compare state and federal laws on wind and solar energy issues related to renewable-focused power purchase agreements see the Wind Energy and Solar Energy topics in the Energy & Utilities State Law Comparison Tool.