Power Purchase Agreement (PPA)
Power Purchase Agreement (PPA) ensures stable electricity prices and a guaranteed clean energy supply. Mt.Stonegate is eager to assist you in switching from fossil fuel to renewable energy and offers in-depth reports for clients to understand their power demand curve, create a market pricing analysis, and select power plant portfolios and related reference documents.
Power Purchase Agreement (PPA) is a long-term contract between two parties, typically a power producer and a power purchaser or company, where the power producer agrees to sell electricity to the power purchaser at a fixed price for a specified period. It is commonly used in renewable energy projects to facilitate the sale of generated energy, offering stability to both parties and promoting investment in renewable energy sources. There are two main types of PPAs: Physical PPA and Financial / Virtual PPA.
Types of PPAs
Physical PPA
Physical PPA is a contractual arrangement between a power producer and a power purchaser where the purchaser agrees to buy a predetermined quantity of electricity directly from the producer and integrate it into their operations. There are 2 types of Physical PPA: On-site PPA and Off-site PPA.
1. Physical On-site PPA
Physical PPA is a contractual arrangement between a power producer and a power purchaser where the purchaser agrees to buy a predetermined quantity of electricity directly from the producer and integrate it into their operations. There are 2 types of Physical PPA: On-site PPA and Off-site PPA.
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1. Customer signs PPA with renewable energy producer to purchase the electricity at a fixed rate.
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3. Customer receives EACs to support the renewable energy consumption claims.
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2. The renewable energy project is located on the customer's site, enabling the direct supply of electricity to power the customer's operations.
1. Customer signs PPA with renewable energy producer to purchase the electricity at a fixed rate.
2. Physical Off-site PPA
Offsite PPA is a contractual arrangement between a power producer and a power purchaser in which the electricity generation facility is separate from the purchaser’s premises. The electricity generated at the offsite facility is transmitted through the electricity grid.
1. Customer signs PPA with renewable energy producer to purchase the electricity at a fixed rate.
2. The renewable energy producer will supply the electricity to the customer using one of the following methods:
a.) Direct Transmission Line: If there is a direct grid between the renewable energy producer and the customer,
b.) Utility Electricity Grid: If the renewable energy producer transmits the electricity to the utility, it will wheel it through the market grid to the customer. This mechanism, known as power wheeling, may involve additional charges.
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1. Customer signs PPA with
renewable energy producer to
purchase the electricity at a fixed rate.
3. Customer receives EACs to support the renewable energy consumption claims.
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