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Physical Power Purchase Agreement Template for United States

A Physical Power Purchase Agreement is a legally binding contract used in the United States energy market that establishes the terms and conditions for the physical delivery of electrical power from a generator to a buyer. The agreement covers crucial aspects including delivery points, quantity, pricing, scheduling, and operational requirements. It operates under both federal regulations (FERC) and state-specific energy laws, incorporating necessary compliance with regional transmission organizations and environmental requirements.

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What is a Physical Power Purchase Agreement?

Physical Power Purchase Agreements are fundamental instruments in the U.S. energy market, used when a power generator needs to establish a long-term arrangement for the physical delivery of electricity to a buyer. These agreements are particularly crucial for project financing and ensuring stable revenue streams for power generation facilities. The Physical Power Purchase Agreement includes detailed provisions for power delivery specifications, pricing mechanisms, operational requirements, and risk allocation, while ensuring compliance with both federal (FERC) regulations and state-specific energy laws. It's especially relevant for new generation facilities seeking project finance and established generators looking to secure long-term offtake arrangements.

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

1. Parties: Identification of buyer and seller, including full legal names and addresses

2. Background/Recitals: Context of the agreement, including facility description and purpose

3. Definitions: Key terms used throughout the agreement

4. Sale and Purchase Obligations: Core obligations including capacity, energy amounts, and delivery points

5. Term and Termination: Duration of agreement and termination conditions

6. Price and Payment: Pricing structure, payment terms, and billing procedures

7. Delivery and Metering: Specifications for power delivery and measurement

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

1. Credit Support: Financial security requirements - used when dealing with non-investment grade counterparties

2. Environmental Attributes: Treatment of renewable energy credits and other environmental benefits - used when dealing with renewable energy sources

3. Development Milestones: Construction and development timeline requirements - used when facility is not yet operational

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

1. Facility Description: Technical specifications of the generating facility

2. Product Specifications: Detailed description of energy products and capacity

3. Pricing Schedule: Detailed pricing mechanisms and calculations

4. Operating Procedures: Detailed operational requirements and procedures

5. Form of Performance Security: Template for required security instruments

6. Interconnection Requirements: Technical requirements for grid connection

Authors

Alex Denne

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

Jurisdiction

United States

Cost

Free to use

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