Power Purchase Agreements

A comprehensive overview of power purchase agreements – understanding the structure, different financing structures, risks, and regulations

Address Key Issues

Understand the typical structure of the PPA document and the provisions in a power purchase agreement

Gain A Full Understanding

Discover what it takes to make a power purchase agreement “bankable” – i.e. what provisions must a PPA have in order for lenders to provide debt to the project?

Key Takeaways
Enable buyers and sellers to actively participate in PPA negotiations

Power Purchase Agreements

Due to the relatively high capital costs of renewable energy power plants, investors require long-term certainty about the plant’s ability to sell the power it generates, for this a long-term power purchase agreement is required. This 3-day workshop will equip you with the best practices from around the world. Delegates will have the opportunity to analyse and assess real-life power purchase agreements and case studies.

IN JUST 3 DAYS YOU WILL:

  • Understand the typical structure of a PPA document
  • Understand the underlying economic terms and how to find them in a power purchase agreement. For example – how are tariffs in a PPA expressed and how are those prices determined in both regulated and deregulated markets?
  • Learn about the risks that a power purchase agreement can address
  • Discover what it takes to make a power purchase agreement “bankable” – i.e. what provisions must a PPA include in order for lenders to provide debt for the project
  • Put power purchase agreements in the context of the broader contractual framework and applications in various markets across geographies
  • Enable buyers and sellers to actively participate in PPA negotiations

MEET YOUR TRAINER

Our Expert Trainer is a Managing Director of an independent specialist consultancy advising companies in clean energy across the value chain and technologies. He brings project ideas to fruition by bridging complementary areas of renewable energy technologies, project finance, and experience in project development.

He has been involved as both consultant and developer in utility-scale solar and wind power, solar greenhouses, and waste-to-energy plants in Europe, Africa, and the Middle East.

Organisations that will benefit:

  • Banks and Lawyers
  • Government and Regulators
  • Power Companies
  • Investors
  • Consultants
  • Oil & Gas Companies
  • Insurances
  • Utilities
  • Suppliers
  • National Utilities and Grid Operators

Who will attend:

  • C-level Executives
  • Lawyers
  • Project Developers and Equity Investors
  • EPC Contractors

COURSE AGENDA

Day 1: PPA components, Context and Financial Provisions ⇓

Components

  • Purpose of PPAs, basic structure, and definitions
  • Milestones
  • Risks that can be addressed by a PPA

 

Context

  • Characteristics of power plant technologies and their significance in PPAs
  • A roundup of technologies and fuels
  • Power plant context: evacuation infrastructure and market structures
  • Basic PPA types and categories

 

Financial Provisions

  • Definition of volume: take-or-pay, taken-and-pay, contracted volume
  • Tariff structure: base tariff, linking to commodity prices and other benchmarks, currency, term
  • Pricing methods: feed-in tariff, auctions, regulated asset-based model, auctions
  • Invoicing: billing cycle
  • Delivered, deemed and non-delivered energy
  • Secondary revenue streams from green certificates and availability payments
  • Tax incentives

Day 2: Risk Management, Financing and PPA Negotiations ⇓

Risk Management with PPAs

  • Risk of volume and variable price
  • Natural force majeure
  • Currency exchange risk – local currency loans
  • Change in law
  • Credit risk and strategies to improve the rating of a PPA through guarantees or liquidity facilities
  • Seller default
  • Development and construction risks
  • Operational phase risks
  • Political force majeure

 

Project Finance

  • Overview of non-recourse finance and the role of PPAs
  • Investment and lending decisions based on cash flow waterfall model using net present value and debt service cover ratios.
  • Bankability criteria
  • PPA provisions for financiers’ rights
  • Alternatives to PPA: merchant model, hedging in the power and gas market

 

Negotiating a PPA

  • Setting objectives for the negotiations for all participants
  • Negotiable and non-negotiable terms
  • Role of the regulator in negotiations
  • The use of “heads of terms”

Day 3: Other Clauses, Related Agreements and Corporate PPAs ⇓

Technical Provisions

  • Plant description: interconnection point vs interconnection works
  • Metering: installation and testing
  • Testing, commissioning and acceptance of the plant
  • Operation: maintenance, standards, reporting

 

Other Provisions

  • Dispute resolutions and arbitration
  • Circumstances of early termination
  • Termination compensation
  • Insurance requirements

 

Related Agreements

The “PPA Ecosystem” of contracts:

  • Equipment, Procurement and Construction contract (EPC)
  • Fuel supply agreement
  • Operations & Maintenance contract
  • Project Implementation Agreement (PIA) with a government
  • Land Lease Agreement

 

Corporate PPAs

  • The market for corporate PPAs
  • Regulatory requirements for corporate PPAs in grid-connected power plants
  • Sleeved and synthetic PPAs
  • Contract for Difference

BROCHURE

IN-HOUSE

If you have a team of three or more, our experts can come to you!

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