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Physical Power Purchase Agreement Template for England and Wales

A Physical Power Purchase Agreement (PPA) under English and Welsh law is a legally binding contract between an electricity generator and a purchaser for the sale and purchase of physical electricity. The agreement governs the commercial and operational terms of electricity sales, including pricing, delivery obligations, metering requirements, and operational procedures. It provides long-term revenue certainty for generators while ensuring secure power supply for purchasers, all within the framework of UK electricity market regulations and grid requirements.

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What is a Physical Power Purchase Agreement?

Physical Power Purchase Agreements are essential instruments in the UK energy market, providing the contractual framework for electricity trading between generators and purchasers. These agreements, governed by English and Welsh law, are particularly crucial for project finance and long-term energy procurement strategies. A Physical PPA typically includes detailed provisions for electricity delivery, pricing mechanisms, operational requirements, and risk allocation, ensuring compliance with UK regulatory requirements and grid codes. The agreement is fundamental for both renewable and conventional power projects, offering revenue certainty for generators and supply security for purchasers.

What sections should be included in a Physical Power Purchase Agreement?

1. Parties: Identification of buyer and seller, including registered addresses and company details

2. Background: Context of the agreement, facility details, and purpose of the PPA

3. Definitions: Key terms used throughout the agreement

4. Sale and Purchase Obligations: Core obligations regarding electricity delivery and offtake

5. Pricing and Payment: Price structure, payment terms, invoicing, and dispute mechanisms

6. Term and Termination: Duration of agreement and termination rights

7. Metering and Communications: Requirements for measuring delivered electricity

8. Operating Conditions: Technical requirements and operational procedures

What sections are optional to include in a Physical Power Purchase Agreement?

1. Green Certificates: Provisions for handling REGOs and other environmental attributes - used for renewable energy facilities

2. Capacity Market: Provisions relating to capacity market participation - used when facility participates in capacity market

3. Development Obligations: Construction and commissioning requirements - used for facilities not yet operational

4. Change in Law: Mechanisms for dealing with regulatory changes - recommended for longer-term PPAs

What schedules should be included in a Physical Power Purchase Agreement?

1. Facility Description: Technical specifications of the generation facility

2. Testing Procedures: Commissioning and performance testing requirements

3. Operating Parameters: Detailed technical and operational requirements

4. Pricing Mechanism: Detailed price calculations and adjustments

5. Metering Specifications: Technical requirements for metering equipment

6. Form of Direct Agreement: Standard form for lender direct agreements

7. Communication Protocols: Procedures for operational communications

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

England and Wales

Publisher

Ƶ

Cost

Free to use

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