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Glossary

The Kallanish Glossary aims to be a useful resource for complex industry specific terminology. We are constantly adding to our glossary, so if you have a suggestion or amendment please do get in touch.

Power purchase agreement

Power Materials

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.  A PPA is the principal agreement that defines the revenue and credit quality of a generating project and is thus a key instrument of project finance. There are many forms of PPA in use today and they vary according to the needs of buyer, seller, and financing counter parties.

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