Key Parts of a Power Purchase Agreement
Tariff Structure – Provides the details of how NBET will pay for the duration the PPA is calculated.
Risk Allocation – Identifies all project related risks and allocates these risks to parties best able to bear them.
Conditions Precedent – Provides all the conditions precedents (CPs) which either the Buyer (NBET) or Seller (Owner of plant) must satisfy before the PPA can become effective.
Tenor of PPA – A standard NBET PPA has a 20 year tenor.There are clauses within the PPA to handle early termination due to either a Buyer’s or Seller’s default.
Project Documents – All documents that are connected to the PPA such as Engineering, Procurement and Construction, Gas Supply Agreement (GSA), Gas Transport Agreement (GTA), Operations and Maintenance, Long Term Service Agreement, Financing documents e.t.c.
Commissioning & Testing Procedure – Contains a set of guidelines for plant testing and commissioning.
Operation & Maintenance – Contains details of the maintenance and operational obligations of the Seller throughout the tenor of the PPA.
Conflict Resolution – Indicates clear procedures for conflict resolution in case of disputes and/or conflicts on invoices.
Metering – Sets out the rules about metering. However, in case of conflicts between PPA provisions and the metering code, the metering code supersedes.
Liability & Indemnification – Enumerates the parties responsible for certain failures and provides indemnification to both parties.
Insurance – States the required insurance coverage to be put in place by the Seller and how the proceeds will be administered.
Scheduling Notices – Provides a methodology by which the Buyer nominates for the dispatch of Net Electrical Output to be made available at the delivery point by the seller.
Force Majeure – Provides details of events to be considered as force majeure and possible payments during the occurrence of such events.