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Understanding & Negotiating Power Purchasing Agreement Training

June 17 @ 8:00 am - June 28 @ 5:00 pm EAT

Course Overview.

A Power Purchase Agreement (PPA) is a legally binding contract between the energy producer and an end
user (often a big electricity user) that specifies the terms under which the end user agrees to purchase energy
from the developer at a specified price. A Power Purchase Agreement (PPA) may be thought of as the selling
of a project and its natural elements, since it is a binding agreement that enables a generator to evaluate the
project’s profitability, risk and make an investment choice accordingly.

This hands-on training focuses on enhancing expertise in understanding how Power Purchase Agreements
(PPA’s) work; their challenges and opportunities; their contractual arrangements and a particular focus on
strengthening negotiation skills – with special emphasis on multilateral negotiation with and within
international organizations and companies.

Expected Training Outcomes.

 Understand the concepts of power purchasing and contracting
 Learn common terminology used in the agreements and their negotiation
 The different project structures and models for a PPA
 The roles and responsibilities of the seller and buyer under a PPA
 The essential contractual clauses necessary
 Risk management strategies
 Guarantees and warranties
 Pricing, tariffs and take or pay obligations
 Contract compliance and penalties
 Avoiding common errors and mistakes in negotiating a PPA agreement

 Adopting risk management strategies and the allocation and limitation of liability between seller and
buyers
 Examine typical payment structures and mechanisms

Learning Modules

Introduction to Power Markets and Power Purchase Agreements (PPAs)
 Overview of the international power sector
 Introduction to Energy Industry and the role of the Power Purchase Agreement
 Concepts in power purchasing and trading
 Different Project Structures & Business Models
 Market structures
 Licenses
 Metering, Measurement and Verification
 Indemnifications
 Purchaser Covenants
 Price and Payment
 Avoided Peak Demand Payments
 Liquidated Damages

Essential Clauses in a Power Purchase Agreement
 Term and Extension
 Performance Guarantees
 SPV’s Construction & Development Obligations
 Contracted Capacity & Energy
 Representations & Warranties
 Insurances Required
 Maintenance and Scheduled Outages
 Commissioning and Commercial Operations Commencement
 Early Termination Rights & Events of Default
 Off-taker Step-in Rights
 Force Majeure Provisions
 Disclaimers and Limitations of Liability & Indemnification
 Subsidies
 Change in Law

3
 Transfer of Ownership Rights, Assignments, Novation’s
 Law & Jurisdiction

PPAs in the Context of Power Project Development
 Types of power purchase agreements
 Parties and project contract mix
 Project structures and timeline
 Case study

Commercial Aspects of a Power Purchase Agreement
 Price, Volume & Tariffs
 Metering
 Take or Pay Obligations
 Shape or Profile Risk
 Balancing Risk
 Credit Risk
 Tenor Risk
 Managing Lender Expectations

Prices: Tariffs, Quantities, Escalation, Payment
 Quantities and delivery
 Contract price
 Outages, metering, invoices

Risk Assessment in a Power Purchase Agreement
 Liquidated Damages – Delay and Performance
 Performance Bonds
 Retentions
 Variation Orders and Cost Overruns
 Dealing with Political Risk
 Dealing with Currency Exposures
 Minimum & Maximum Delivery Obligations
 Buyer Default

4

 Seller Default
 Sovereign Risk
 Change in Tax Law

Negotiation of a Power Purchase Agreement & Dispute Resolutions in PPA
 Negotiate the Best Power Purchase Agreement
o Prepare a Term Sheet
o Set Framework for Negotiations
o Balance Buyer’s and Seller’s Needs
o Focus on Interests not Positions
o Reach Sustainable Agreement
 Negotiation
o Negotiate on Key Milestones to be Achieved & Penalties for Failures
o Negotiate Performance Guarantees
 Dispute Resolution
o Different Types of Dispute Resolution
o Litigation
o Mediation
o Arbitration
o Expert Determination

When Things Go Wrong – Force Majeure, Damages, Termination, Disputes
 Case study – force majeure clauses
 Default and termination
 Dispute resolution
 Case study: Power plant explosion and fire

Way forward After the Training
Participants will develop a work plan through the help of facilitators that stipulates application of skills
acquired in improving their organizations. ASPM will monitor implementation progress after the training.

Training Evaluation:
Participants will undertake a simple assessment before the training to gauge knowledge and skills in the field and another assessment will be done after the training in-order to monitor knowledge gained through the training.

 

Enroll Today.

June 17 @ 8:00 am - June 28 @ 5:00 pm

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