PPAs, or Power Purchase Agreements, are contracts between an energy producer and an energy supplier, which means someone who has a supply licence. As you can probably guess, they’re agreements to purchase power. PPAs are for the generation of power, as opposed to the supply - which will be contracted under a PSA (or Power Supply Agreement). There are several components to a PPA, but essentially they give generators a price per MWh for the energy they produce. This can be fixed in advance, so that the price is guaranteed, or it can be subject to more market exposure, which introduces more risk to the generator but less to the supplier. But how do PPAs work?
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