What are the salient features of Power Purchase Agreement?
Basically a power purchase agreement is the contract between the producer of electricity and buyer of electricity. It has a number of features like it is a legal document. It is the financing tool of electricity generating assets. It provides the details of the risks and the responsibilities of ownership. These responsibilities are legally decided when there is a purchase of the power. This agreement is also featured to be used for raising non-recourse financing. For example, by showing associated revenue and output of generating asset, non-recourse financing can be raised. On the basis of a PPA, commercial providers of PPA are also enabling entities to get benefit from renewable sources of energy.
