Solar PPA (Power Purchase Agreement)

A Power Purchase Agreement (PPA) often refers to a long-term electricity supply agreement between two parties, usually between a power producer and a customer (an electricity consumer or trader). The PPA defines the conditions of the agreement, such as the amount of electricity to be supplied, negotiated prices, accounting, and penalties for non-compliance

The seller

Under a PPA, the seller is the entity that owns the project. In most cases, the seller is organized as a special purpose entity whose main purpose is to facilitate non-recourse project financing.

The buyer

Under a PPA, the buyer is typically a utility or a company that purchases the electricity to meet its customers’ needs. In the case of distributed generation involving a commercial PPA variant, the buyer may be the occupant of the building—a business, school, or government for example. Electricity traders may also enter into PPA with the Seller.

Why PPAs?

Depending on regulation and the market environment, different situations can arise in which PPAs are an advantageous form of financing or a stabilizing factor in long-term power delivery.

In Pakistan, for commercial projects where capital investment is a barrier, some companies are now offering PPA Model Solar Energy, We at Solar grid offers to sell electricity at no investment with no CAPEX investment at your end.
You can optimize your OPEX by working a PPA agreement with us. As part of the solar power purchase agreement, we will arrange for the design, permissions, financing and installation of a solar energy system on the client’s property at no cost. Without any upfront investment, your company can adopt solar and begin saving money as soon as the system becomes operational.

Operation and metering

Maintenance and operation of a generation project is the responsibility of the seller. This includes regular inspection and repair, if necessary, to ensure prudent practices. Liquidated damages will be applied if the seller fails to meet these circumstances. Typically, the seller is also responsible for installing and maintaining a meter to determine the quantity of output that will be sold. Under this circumstance, the seller must also provide real-time data at the request of the buyer, including atmospheric data relevant data for solar project.

Pricing

Electricity rates are agreed upon as the basis for a PPA. Prices may be flat, escalate over time, or be negotiated in any other way as long as both parties agree to the negotiation.

What are the Advantages of Power Purchase Agreements?

The advantages of a Power Purchase Agreement include long-term price security, opportunities to finance investments in new power generation capacities, or the reduction of risks associated with electricity sales and purchases. In addition, a specific physical supply of electricity with certain regional characteristics and guarantees of origin can occur. Customers can use this opportunity to make their brand more sustainable and greener.
The open-end of the contract’s design also creates a great deal of leeway to reflect preferences of individual plant operators and electricity consumers. This also applies to pricing: PPAs can be signed at fixed prices, or can allow for greater participation in market risks and opportunities.

Royal Solar Energy is also working on it. In a short time, we’ll also offer PPA Based solar systems to different commercial and Industrial areas.
We take care of planning and implementing the investment, energy management, energy supply, operations and maintenance.
And also assumes all technical risks and responsibilities
Clients can focus on their core business