Power Purchase Agreements - First Edition 2026

Description

OVERVIEW

This is a working document, not a market report. It assumes you are about to sign something, or about to ask someone else to.

Power purchase agreements are priced as one number and negotiated as a dozen separate decisions. This guide separates them: what you are actually buying, how price forms and why capture rates broke the standard corporate PPA, which risks belong on which side of the table, and what a credit committee will and will not finance.

Written for both chairs. Every risk is read from the buyer’s side and the seller’s, because the price of conceding a point is only legible when you can see what it is worth to the person asking for it.

WHAT THIS EDITION COVERS

Sixteen parts covering the full negotiation - the map of who sits where, diagnosing which of five market types you are in, choosing between physical, sleeved, virtual, retail and captive structures, what you are really buying, price formation and the capture problem, testing the counterparty, the term sheet, the risk register, bankability, negotiation sequence, execution and settlement, life of contract, pitfalls, a worked example across three archetypes and five years of settlement, accounting and tax, and endgame. Closes with a five-page tear-out field checklist, a market annex by archetype, and reference appendices including a clause concordance.

WHO THIS IS FOR

Buyers, sellers, developers, lenders and advisers negotiating or financing a power purchase agreement in any global market.

WHAT YOU GET

Written for both sides of the table, not just the buyer
Deal evidence from real transactions
What This Costs You - the price of conceding each point
Ask Before You Sign - questions to put to the counterparty
Best-practice guidance at each stage of the negotiation
A worked example: one project, three archetypes, five years of settlement
A five-page tear-out field checklist
Market annex by archetype, plus a clause concordance and glossary

How to use this guide

Part 0 The Map

Who sits where in a power purchase agreement, and where the margin is actually made

Part 1 Which Negotiation Are You In

Five markets, five different contracts. Diagnose yours before you draft anything

Part 2 Choosing Your Structure

Physical, sleeved, virtual, retail, captive - what each one is actually for

Part 3 What You Are Really Buying

Energy, shape, firmness, attributes and a hedge - priced separately even when quoted as one number

Part 4 Price Formation and the Capture Problem

Capture rates, cannibalisation, negative hours and basis - the arithmetic that broke the standard corporate PPA

Part 5 Finding and Testing the Counterparty

Running the process from either side, and working out whether the name on the other signature page is good for fifteen years

Part 6 The Term Sheet

The dozen decisions that fix ninety per cent of the value, before a lawyer has drafted a word

Part 7 The Risk Register

Eight risks, two parties, and the price of moving each one across the table

Part 8 Bankability

What gets financed, what gets repriced, and what gets refused - read from the credit committee's side of the table

Part 9 Negotiation

Sequence, leverage and the order in which to give things away

Part 10 Execution and Settlement

Conditions precedent, commercial operation, and how the money actually moves

Part 11 Life of Contract

Years one to fifteen. Reforecasting, disputes, amendments, and the renegotiation that is coming

Part 12 Pitfalls

Fourteen ways this goes wrong, seven from each chair

Part 13 The Worked Example

One project, three archetypes, three contracts - then five years of settlement, including a bad one

Part 14 Accounting, Tax and Attributes

Derivative treatment, attribute integrity, and the tax position that decides who should own the asset

Part 15 Endgame

Default, termination payment, assignment and what happens to the asset when the contract runs out

TEAR-OUT

The Field Checklist
- Five pages. Everything that decides the outcome, with nothing that does not.

MARKET ANNEX

The Markets, by Archetype
- The perishable layer. Everything else in this guide is written to outlast it.

APPENDICES

Reference

Glossary
On sources
Clause concordance
Index
Sources and references