Power Purchase Agreement

power purchase agreement (PPA), is a contract between two parties, one which generates electricity (the seller) 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.

The agreements represent an alternative opportunity for expanding renewables to areas where politicians are hesitant to push forward with renewable energy expansion (and subsidization).