This guide explains the basics of Power Purchase Agreements (PPA) and how Crown Commercial Service (CCS) can assist with their procurement. We aim to cover the main topics to ensure public sector buyers understand what they need to consider when looking to procure a PPA.

What is a PPA?

Put simply, a PPA is a contract between two parties, one which generates electricity (the generator) and one which is looking to purchase electricity (the buyer). The PPA defines all of the commercial terms for the sale of electricity between the two parties, including when the project will begin commercial operation, schedule for delivery of electricity, penalties for under delivery, payment terms, and termination. (A similar arrangement is also available for “green” gas and is known as a Gas Purchase Agreement (GPA) but for the purpose of this document we will focus on electricity).

There are a number of different contractual models by which a PPA can be delivered, and it is important to understand what choices of PPA delivery models there are, the differences between them and their associated opportunities, benefits and risks.

This understanding will help guide public sector organisations when deciding the approach that best suits their needs and requirements when looking to secure a PPA agreement. CCS is able to support full end to end PPA services through its energy agreements RM3824 Heat Networks and Electricity Generations Assets (HELGA) and RM6011 Supply of Energy.

Contents

• What is a PPA?
• PPA as part of an Energy Strategy
• PPA Benefits
• Procuring a PPA
• Glossary

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