A Power Purchase Agreement (PPA) is an agreement between an independent power generator (vendor) and a purchaser (known as off-takers), for the sale and supply of energy.

There are three common types of PPAs, these include:

Retail-sleeved PPA: This agreement can come in the form of a wind or solar farm and an energy retailer, whereby renewable energy generation is agreed upon. The PPA matches the renewable energy supply to your load at the time of generation. The benefit of this agreement is that the retail supplier takes the risk with wholesale electricity whilst the customer gets a fixed price for energy.

Front of the meter PPA: This form of PPA is an agreement between large-scale businesses or retailers and a renewable generator. Power is delivered through power lines owned by your local energy company, the electrical output is injected at the generation site and consumed at its point of use. A transmission fee is paid to the local energy company for use of their infrastructure.

On-site PPA: An on-site PPA can mean that if you have on-site solar, you can make the most of your on-site energy generation by creating a PPA between your business and the PPA provider. This allows you to buy energy from your PPA provider at a cheaper rate than getting energy from the grid.

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