Talk:Power purchase agreement

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The previous definition falls woefully short on so many fronts: (1) PPAs are a staple of the energy industry and were not invented for renewable energy, (2) the PPA is not between the owner and the financier(!), it's between the asset owner and the offtaker for the purpose of raising financing, (3) the rest of my comments inserted in the entry below:

-x- A Power Purchase Agreement is a legal contract between a property owner and a financer. (Comment: This misses the key point, the PPA is between the asset owner and the offtaker for the purpose of securing financing from a bank or other counterparty. The offtaker entity may be a utility, electricity-user, or trader--the key thing is that they must have good credit in order to make the PPA finance-able.) It is sometimes also called Third Party Financing for power contracts. (Comment: Isn't financing always "third party"?)

For renewable energy projects the financer secures the funding for the renewable energy source, maintains and monitors the energy production and then sells the electricity to the site owner at a predetermined price for the term of the contract. Contract terms can range between 5 to 25 years with the option that at the end of the term the site owner can purchase the renewable energy equipment from the financer, can renew the contract with different terms, or can request that the equipment be removed. (Comment: Ovely specific or wrong on almost all points. The asset owner secures funding, owner not financer sells the power, price may or may not be pre-determined, term may be of any length, site owner may or may not have purchase rights).

The advantage of a Power Purchase Agreement to the property owner is that the owner does not need to invest in the high cost of renewable energy equipment and has a guaranteed price of electricy for the term of the contract. The site owner may be able to gain tax credits by selling renewable energy credits (REC), also known as Green Tags. (Comment: This sounds like it's from the point of view of someone who is only looking at this as an alternative to owning a renewable generating system. PPAs are used for all types of generating assets--without any preference for renewables. And the main point of a PPA is to secure the revenue streams associated with the sale of power/energy output to a credit-worthy customer as a basis for raising project financing. Tax credits and Green Tags are completely separate concepts and have no relationship such as that suggested by the last sentence.)

For the financer, a PPA provides a steady stream of income from the property owner. Generally governmental tax credits go to the financer to help determine a lower cost of electricity to the property owner. The contract can also be set up to allow the financer to sell the renewable energy credits to further reduce the cost of electricity to the property owner. (Comment: Just plain wrong. The PPA provides a defined stream of income to the project owner, thereby assuring the bank/lender that the project owner has sufficient revenue to cover financing obligations...eg debt service or distributions. Tax credits (are there non governmental tax credits?) may or may not be offered to the financer.)

A PPA usually includes many predetermined conditions that protect both parties of the agreement regarding the project development timeline, permitting, connection to the electrical grid, operation, maintenance, monitoring, cleaning, and payment terms. Since PPAs are very complex, it is advisable to include legal assistance when negotiating the terms of the PPA contract. (Comment: The term examples seem overly specific to certain types of solar PPAs. The rest seems obvious, particularly the part suggesting parties to a PPA get legal advice.)

With current levels of inflation, many power purchase agreements can benefit both the financer and the property owner, while also benefitting the world environement by replacing fossil energy use with renewable energy sources. (Comment: I reckon that when two parties sign an agreement they both think it will benefit them regardless of "current levels of inflation"--why else would they sign? Who benefits in a PPA under various inflation scenarios depends on how the price is modified over time. The part about benefiting the world environment seems entirely independent of inflation and of PPAs.)

-x-

Recommend striking the entire thing and replacing with the new entry.

--71.202.77.18 (talk) 05:38, 17 December 2007 (UTC)

Comment on last article replacement
Last critique was fairly harsh and left a very general statement which omitted many of the details. Could not find a definition for 'offtaker' and recommend replacement with 'purchaser'. Revision also used legal terms such as ‘non recourse financing’, and ‘counterparty’ that would benefit from links to definitions. Page could be further expanded in the future with examples or samples.

JROJAI (talk) 08:01, 6 January 2008 (UTC)JROJAI

Partial definition only ???
"A Power Purchase Agreement (PPA) is a legal contract between an electricity generator and a host site owner or lessor. The host site owner or lessor purchases energy or capacity (power or ancillary services) from the PPA Provider (the electricity generator)."

A PPA can simply be a very long term contract for power between generator and user. The renewable PPA involving generation placed on a non-owned host site is certainly not the only one. For example in Alberta which has a deregulated electricity market, a large PPA would probably be necessary between a nuclear power plant and its power users (likely the oil sands) in order to guarantee economic feasibility for the project and to secure financing.

In this case a PPA may be just a very distant looking forward contract.

Razamatraz (talk) 22:31, 30 July 2009 (UTC)

This article is really atrocious. The top commenter is pretty much right on. Heck, the minidefinition on the PPA disambiguation page is superior to the current article.

This article includes a whole bunch of non-PPA discussion about solar energy and renewable energy - and, of course, a reader would get the (incorrect) impression that PPAs are a solar energy creature. Recommend striking this entry in its entirety and starting from scratch.

PPAs are used with every type of generating technology, and most do not involve a "site host" (a term that in a PPA context really only applies to a sub-set of solar facilities and to cogen facilities). In most PPAs, the offtaker is unrelated to the landowner. In most PPAs, the offtaker is a regulated utility that most certainly does not own the land upon which the powerplant sits.

Anyway - no need to repeat the excellent and thorough critique above. Bottom line - this article is at best misleading and partially irrelevant. At worst it is simply wrong.

Rambino (talk) 07:08, 12 September 2009 (UTC)

School project edits
In the next few days this page will soon get a significant revision and subsequent editing from students participating in the Public Policy Initiative. This article was chosen because it is missing content or sourcing and has been relatively innactive. Their draft articles are being formed in their user space and will be transfered here. Links to the drafts can be found at WikiProject United States Public Policy/Courses/Political Economy of Technology and Science fall 2010. I will not be allowing students to that first initial transfer unless their article has been significantly improved in references and content. Please provide comments on the significant revisions and help the students improve the Wikipedia formatting. However, I would greatly appreciate that any major content changes be suggested to the students on the talk page so that they get the experience editing collaboratively and through consensus and feedback. The final date for the project is Friday December 10, expect significant editing from now until then. Thank you.

If you have any questions feel free to raise them here or on my talk page, Myself and other WP:Online Ambassadors will be monitoring their edits, so we will also be able to help fix issues on the pages, Sadads (talk) 01:19, 1 December 2010 (UTC)

Requested move

 * The following discussion is an archived discussion of the proposal. Please do not modify it. Subsequent comments should be made in a new section on the talk page. No further edits should be made to this section. 

The result of the proposal was moved. --BDD (talk) 23:19, 4 February 2013 (UTC)

Power Purchase Agreement → Power purchase agreement – Per WP:NCCAPS. Beagel (talk) 17:35, 28 January 2013 (UTC)
 * Support - non-controversial, I would have though a technical request move okay here, PPA is capitalized because it's an abbreviation, but the actual term isn't (normally one doesn't change article lead during an RM, but in this case since there is zero print source support, I just added 2x representative GB sources and removed lead caps). In ictu oculi (talk) 01:08, 29 January 2013 (UTC)
 * The above discussion is preserved as an archive of the proposal. Please do not modify it. Subsequent comments should be made in a new section on this talk page. No further edits should be made to this section.

Power and water purchase agreement
Anyone willing to expand this article to include PWPA as well? It is similar to PPA, used by Integrated Water and Power Plants (IWPP). It is not my area of expertise, hence I don't want to unintentionally mess things up. For now, I will redirect PWPA to this article. Reh man  13:36, 6 June 2019 (UTC)

Deletion of obvious/non-notable information
I'm going to remove several parts of this article that state the obvious or are very general reformulations of contract law (e.g., 'The PPA is considered contractually binding on the date that it is signed'). There's quite a bit of this sort of 'information' in the article, but I'll make my deletions in smaller related edits to make individual ones easier to undo if someone feels I've gone too far. Tserton (talk) 12:11, 28 January 2023 (UTC)