An introduction to PPA market in India.
Introduction A PPA is a legal long-term contract between a buyer and a seller of electricity where the buyer is mainly a state-owned distribution company and the seller is a privately owned electricity-producing plant. The producer is the one who pays for the sizing, design, installation, and infrastructure facilities and gets the cash from selling the produced electricity to the electricity distribution companies. Benefits Ø Reduces the electricity price risk for the operators and financiers of the power plant as the agreement provides for the mandatory fee payment by the off-takers. Ø The agreement protects from competition from the producer of electricity who may be challenged by another local producer who can offer electricity at much cheaper rates. Ø It envisages a projected revenue from the PPA project by determining the quantity of electricity to be bought and the price to be paid in advance at the time of entering the contract. Ø ...