The Energy Academy
Start Learning Free
Legal

Power Purchase Agreements (PPAs)

Understand how PPAs are structured, priced, financed and negotiated.

Start learning free Already a member? Log in

A free Academy account is required. 33 lessons.

About Power Purchase Agreements

The power purchase agreement is the contract that makes most solar projects financeable. This course covers PPA types and structures, pricing and escalators, key contract terms, what makes a PPA bankable and how developers and offtakers negotiate.

What You'll Learn

Understand the structure

Compare physical and virtual PPAs and who touches the agreement.

Price the deal

Work through pricing models, escalators, term length and guaranteed production.

Know the key terms

Review delivery obligations, performance guarantees, buyouts and default.

Negotiate a bankable PPA

Balance developer and offtaker priorities and spot common red flags.

Explore the Course Topics

33 lessons, grouped by topic. Open a topic to see its lessons.

01PPA fundamentals6 lessons
  1. What Is a Power Purchase Agreement?
  2. PPA Structure and Components
  3. Who Touches the PPA?
  4. PPA Types (Physical vs Virtual)
  5. Benefits and Risks of PPAs for Developers and Investors
  6. Legal and Regulatory Considerations for PPAs
02Pricing and production5 lessons
  1. PPA Pricing Models
  2. Pricing Structures
  3. Escalators and Term Length
  4. Guaranteed Production
  5. Evaluating PPA Opportunities
03Key contract terms9 lessons
  1. PPA Key Terms Guide
  2. Term, Commercial Operation and Contract Dates
  3. Energy Delivery and Purchase Obligations
  4. Performance Guarantees in PPAs
  5. Billing Mechanics
  6. Environmental Attributes and RECs
  7. Buyout Options
  8. Default, Termination and Damages
  9. Change in Law and Regulatory Risk
04Financing and bankability5 lessons
  1. Understanding PPAs in Solar Financing
  2. Financial Modeling for PPAs
  3. What Makes a PPA Bankable?
  4. Allocating Risk Between Seller and Offtaker
  5. Creditworthiness and Offtaker Risk
05Negotiating the PPA5 lessons
  1. Negotiating PPA Terms and Conditions
  2. Developer Perspective: Where Do You Hold the Line?
  3. Offtaker Perspective: What Does the Buyer Care About?
  4. Common PPA Red Flags
  5. PPA Negotiation Scenario/Challenge
06Case studies and template3 lessons
  1. Case Studies of Successful PPAs
  2. PPA Evaluation Case Study
  3. Sample PPA Template