Power Purchase Agreement (PPA)

What is a Power Purchase Agreement (PPA)?

A Power Purchase agreement is an agreement between the seller (a generator) who wishes to sell the net electrical output to the buyer (a licensed supplier of electricity). This can be done as part of a government subsidy scheme called Renewable Energy Feed-in Tariff (REFIT) which guarantees a minimum price for electricity sold into the market.

Alternatively, electricity can be sold into the market at a Feed-in Tariff (FIT) which reflects the price at which electricity is traded.