nanamcherla bhargav’s Post

View profile for nanamcherla bhargav, graphic

Equity research & investment banking Aspirant | Financial Modelling | Valuations | Financial Analysis

Day 22 Today I learned about PPA. Power Purchase Agreement is a contractual agreement between producer(Seller) and buyer ( an entity, government). PPAs play a key role in project financing, especially in renewable energy projects. PPAs happen in generation, transmission and distribution. PPA sets rules under which electricity will be generated and sold. It establishes a steady and predictable income source for both parties is the main objective of a PPA. It has a long tenure, the agreement may vary from 10 years to 25 years. The price can be fixed or variable or maybe indexed. There may be prepayment contracts, in which the buyer pays the amount in advance. There are many benefits associated with PPAs, such as long-term pricing stability, reduced risk, and an emphasis on environmental sustainability. It reduces the market risk for both buyer and producer. It encourages long-term investments by providing revenue predictability. There are different types of PPAs which depend upon the type of contract between the producer and buyer. Examples are: On site power PPA Off site power PPA Virtual PPA etc.

  • No alternative text description for this image
Needhi Bhatter

Chart Reader | Technical Analyst | Swing Trader | AMFI REGISTERED MUTUAL FUND DISTRIBUTOR |

2mo

Interesting

Like
Reply

To view or add a comment, sign in

Explore topics