Contract for buying electricity - October 2025
A new course has been making waves in the energy sector, as it equips participants with a deep understanding of Power Purchase Agreements (PPAs). This training, delivered over five sessions, focuses on the specific components of PPAs that are most commonly the subject of negotiation between power producers and power customers.
The course, provided by Building Energy, has been hailed as super informative and great by those who have attended. The National Energy Authority, for one, found the training to be exceptionally well-structured and insightful, as it broadened their comprehension of essential clauses within a PPA.
Physical PPAs vs Virtual PPAs
The course covers the key components and differences between physical PPAs and virtual PPAs (VPPAs) in renewable energy projects.
Physical PPAs involve the long-term purchase of the physical delivery of electricity directly from a renewable energy generator. Electricity is physically supplied to the buyer’s facility, often requiring an intermediary such as an energy supplier or balancing responsible party to manage transmission and grid balancing. The buyer usually bears the cost of balancing grid fluctuations.
On the other hand, virtual PPAs are financial contracts where the buyer does not receive physical electricity but agrees on a fixed strike price for renewable energy generated by a project that may be geographically remote. The renewable project sells generated electricity at market price to the grid, while the VPPA settles the difference between the strike price and market price as a financial contract for difference (CFD). This setup allows greater location flexibility, enabling companies to meet sustainability goals even when direct renewable sourcing is infeasible.
Course Content
The course covers 15 modules, starting with the fundamentals of power purchasing and important concepts. It delves into topics such as introduction to power markets and PPAs, PPAs in the context of power project development, prices, force majeure, damages, termination, disputes, virtual PPAs, environmental credits, financing, management, and case studies on wind farms and solar farm PPAs.
Attending this course will help participants understand the concepts of power purchasing and contracting, learn common terminology used in the agreements and their negotiation, examine typical payment structures and mechanisms, and learn strategies in negotiating PPAs.
PPAs can be written by independent power producers, governments, or utilities. They are used in various contexts, including the development of new projects and the supply of energy from existing projects. They can operate in regions with sophisticated power exchanges and markets, as well as in developing countries with a single buyer and a centralized monopoly power utility.
With this newfound knowledge, the National Energy Authority now approaches PPA agreements with greater confidence and clarity. Genesis Energy, too, found the course to be excellent for understanding the technical side of PPA negotiations. This comprehensive training is undoubtedly a valuable asset for anyone looking to navigate the complex world of Power Purchase Agreements.
[1] Power Purchase Agreements (PPA) Explained [2] Physical Power Purchase Agreements (PPA) vs Virtual Power Purchase Agreements (VPPA) [3] Power Purchase Agreements (PPA) for Solar Farms [4] Power Purchase Agreements (PPA) for Wind Farms
- Those interested in the renewable-energy industry and finance will find the course on Power Purchase Agreements (PPAs) particularly beneficial, as it delves into virtual PPAs, a financial contract type within the renewable-energy sector.
- Attendees of the course will gain a thorough understanding of negotiating renewable energy finance, learning strategies for PPAs in the context of power project development, pricing, force majeure, disputes, and even specific examples like solar farm and wind farm PPAs.
