1. POWER PURCHASE
AGREEMENTS(PPA)
CORE FACTS

2. PRSENTATION OUTLINE
• CORE FACTS OF PPA
• FACTS OF PPA
• THE RISK INVOLVED IN SUCH ARRANGEMENTS
• THE CASE OF GHANA

3. MEANING OF PPA
• A Power Purchase Agreement (PPA) secures
the payment stream for a Build-Own Transfer
(BOT) or concession project for an
independent power plant (IPP). It is between
the purchaser "offtaker" (often a state-owned
electricity utility company) and a privately
owned power producer. The PPA outlined
here is not appropriate for electricity sold on
the world spot markets

4. Facts of PPA
• State agency enters into agreement for private
power company to establish plant to sell to
government agency
• It usually takes the form of Built Own
Transfer(BOT) , design, output and maintenance
specifications are given in the agreement
• A charge is determined usually realistic to cover
project cost in time including equity on return

5. • A third party sale usually enhance project
financing and cushion the offtaker(buyer)
• Breach of contracts ( contractors are usually
not required to damages resulting in delays)
• Termination period should be provided in
contracts
• Operation schedules should be included(
outages, maintenance, emergencies and
accounts/ records.

6. Risk areas in PPA
• Reduction in monthly tariff
• Breach of contractual agreements( producers not
oblige to pay any money or form of compensation)
• Difficulty in securing long term investment by
governments
• Some areas are technically and commercially
challenging to connect to grid
• Low tariff reduces motivation to invest
• Affordability issues are of great concern to investors
and governments
• Unreliable gas supply

7. When PPA IS NECESSARY
• When revenue for a project is uncertain given
market conditions
• When there is possibility of a cheaper options
from potential competitors
• When there is one major customer or fewer
bulk buyer(S)
• If purchaser wishes to secure security of
supply

8. FORMS OF PPAS
• Emergency power and mobile plants( Ghana
has a number of agreements under this)
• Small and rural projects( Kenya has
agreement under this type for contractor to
supply larger renewable generators with
capacity of more than 10MW, Tanzania had a
PPA involving a standardize mini grid
connection

9. • Medium size and large projects example of
this is PPA and implementation agreement
produced for Pakistan’s private power and
infrastructure board

10. The case of Ghana
• IPPs contribute about 776 megawatts to
electricity provision in Ghana
• IPPS IN GHANA
• Asogli power project(200mw)
• Tema power plant( 126mw)