What is a Power Purchase Agreement (PPA) ?
A Power Purchase Agreement (PPA) is a legally binding contract between a power producer (such as a solar, wind, or thermal energy plant) and a buyer (usually a power distribution company or bulk electricity consumer). The contract specifies terms such as the duration of the agreement, price per unit of power, scheduling, penalties for non-compliance, and mechanisms for dispute resolution. In India, PPAs are governed by both national regulations and state-specific policies, primarily to foster investments in renewable energy and ensure a stable energy supply. Key Elements of a Power Purchase Agreement in India Contractual Duration : PPAs in India typically have a tenure ranging from 10 to 25 years for renewable energy sources, providing long-term stability for both the generator and the buyer. Tariff Structure : Tariffs can be fixed (determined at the start of the contract) or variable (based on market conditions or linked to factors like inflation or fuel cost index). Competitive ...