Power Purchase Agreement Contract For Difference

As a general rule, the termination of an AEA ends with the agreed commercial operating period. An AEA may be terminated in the event of unusual events or circumstances that do not comply with contractual guidelines. The seller has the right to limit the supply of energy if such unusual circumstances occur, including natural disasters and uncontrolled events. The AAE can also allow the buyer to reduce energy if the value of after-tax electricity changes. [9] In the case of a reduction in energy, it is usually because one of the parties involved is liable, resulting in damages to the other party. This can be excused in exceptional circumstances such as natural disasters, and the party responsible for repairing the project is responsible for such damage. In cases where liability is not properly defined in the contract, the parties can negotiate a case of force majeure to resolve these issues. [9] Power Purchase Agreement (AAE) – Low-form agreement for small energy projects in Namibia standard short-form electricity contract for small energy projects developed in Namibia. This is part of a series of documents, including a fuel supply agreement, found at the Nib Electricity Control Board. To illustrate how this works, imagine that two parties enter a financial AAE with a strike price of 10 cents per kWh. The renewable energy producer owes the difference to the customer when the wholesale price is more than 10 cents per kWh and the customer owes the difference to the renewable energy producer when the wholesale price is less than 10 cents/kWh. At the end of each billing period – usually every month – the customer receives from the producer (or sends) the net price difference per kilowatt-hour between the strike price and the wholesale price.

A sleeved AAE is similar to a regular agreement on electricity generated from the grid, with the exception of a portion of the underlying electricity generation from a specific renewable energy project. Synthetic AAEs decouple the physical flow of electricity from the financial flow. This will further increase the flexibility of contractual agreements. With respect to synthetic chaining contracts (also known as sPPAs), producers and consumers agree on a price per kilowatt-hour of electricity, as does a physical AAE.