A power purchase agreement, or PPA, is a contract between a power generator or developer and a power buyer, typically a utility or government entity, outlining the terms of a long-term agreement for the sale and purchase of electricity. PPAs play a critical role in renewable energy development in the Philippines, facilitating the financing and construction of renewable energy projects by providing a long-term off-take agreement for the generated power, thereby mitigating risks to the project.
To help companies and investors navigate the complex world of PPAs in the Philippines, it can be useful to look at sample agreements to understand the typical terms and conditions included in a PPA. In this article, we will take a closer look at a power purchase agreement sample in the Philippines.
The power purchase agreement in this sample is designed for a solar energy project with a capacity of 10 MWp, located in the Philippines. The agreement is between the power generator, referred to as the “Seller,” and the power buyer, referred to as the “Buyer.”
The agreement covers a range of topics, including the delivery and acceptance of electricity, the payment structure, and the allocation of risks and liabilities. Some of the key terms of the agreement include:
– Delivery Point: The Seller is responsible for delivering the electricity at a designated point of interconnection with the Buyer’s transmission or distribution network.
– Capacity: The 10 MWp capacity of the solar energy project is subject to certain limitations and constraints related to weather, transmission capacity, and force majeure events.
– Payment: The Buyer agrees to pay the Seller for the electricity generated by the solar project, based on a fixed price per kWh, subject to certain adjustments and incentives.
– Term: The PPA has a term of 20 years, with provisions for extensions and renewals.
– Force Majeure: The agreement includes provisions for force majeure events, such as natural disasters or other events beyond the control of the parties, which may relieve either party of its obligations under the agreement.
– Default and Termination: The agreement provides for certain remedies and penalties in the event of a default by either party, including termination of the agreement.
Overall, this sample power purchase agreement provides a useful template for companies and investors looking to enter into a PPA for renewable energy projects in the Philippines. By understanding the typical terms and conditions of a PPA, parties can better negotiate and structure agreements that balance risks, rewards, and obligations in a way that supports the development of renewable energy in the country.