POWER PURCHASE AGREEMENTS

What is PPA

Major Components of PPA

Types of PPA

Nodal Agencies involved in operation of PPA

INTRODUCTION

Power purchase agreements are contracts between two parties, the seller who generates the
electricity for the purpose of sale and the buyer who is looking to purchase the electricity.

MAJOR COMPONENTS OF PPA

1. Definitions
Generally the terms used in the power purchase agreements shall have the same
meaning as per the definitions described under the electricity act, 2013 and the rules
and regulations as prescribed by the appropriate commission. The tariff, delivery
point of power, various agencies involved are covered under the definition part.

2. Sigining parties
In this who is the selling party and who is the buying party should be clearly
mentioned

3. Duration…lock in period
The term for which the agreement is signed should be mentioned as if it is the long
term or short term, whether for 10 years or 20 years should be clearly mentioned.
Also new term has been emerging in the renewable power purchase agreements is the
lock in period like in which the consumer has no means of exiting the PPA
irrespective of change in law or force majeure condition. The lock in period should be
typically mentioned and in the past few months for a PPA of 25 years duration the
lock in period typically varies from 10 to 15 years.

4. Tariff……change in law
One of the most important thing to mention in the PPA is the tariff at which the seller
is selling and the buyer is buying. The tariff also involves certain conditions like the
change in law that means if the DISCOM prices changes what will be the new tariff or
if there is any change in regulation which makes the fixed tariff cheaper or costlier.
These things should be mentioned in the tariff.
5. Measurement of energy i.e., metering
For the installation of the meters, meter testing, meter calibration and meter reading
the buyer and seller shall follow and bound by the Central Electricity Authority
Regulations, 2006, the Grid code as amended from time to time.

6. Payment security mechanism

Which typically states how much amount the buyer should be kept as a security to the
developer because the developer is setting up a project for the buyer
7. Billing and payment
8. Representation and warranties
9. Force majeure
10. Default events and terminations
11. Indemnity
12. Notices
13. Governing law and dispute resolution