Power Purchase Agreement Term Sheet
This Term Sheet outlines the principal terms and conditions proposed for a Power Purchase Agreement (PPA) between [Your Company Name], as the power producer, and [Buyer's Company Name], as the purchaser, formalizing the purchase and sale of electricity generated by [Your Company's Project Name] to the buyer.
It serves as a preliminary agreement and will guide the drafting of a more detailed and legally binding Power Purchase Agreement, subject to further negotiation and approval by the respective legal teams of both parties.
I. Project Information
Project Name: [Your Company's Project Name]
Location: [Project Location]
Technology Used: [Technology Type]
Expected Commissioning Date: [Date]
Estimated Annual Production: [Amount in MWh]
The project involves the construction and operation of a facility by [Your Company Name] to harness [Type of Energy, e.g., solar, wind] to produce electricity.
The facility is projected to generate approximately [Amount in MWh] per year, providing a sustainable energy solution aimed at reducing carbon footprint and promoting renewable energy use.
II. Pricing and Payment Terms
Fixed Rate: [Rate] per kWh for the term of the agreement.
Payment Terms: Monthly payments based on the metered amount of electricity delivered.
Incentives: Any applicable environmental or production-based incentives will be directed to [Buyer's Company Name].
Adjustments: Price adjustments to be reviewed every [Specify Period] years in relation to market conditions and regulatory changes.
The pricing structure is designed for stability and predictability, ensuring [Buyer's Company Name] can anticipate costs over the agreement's duration, aiding in budgeting and financial forecasts.
Regular adjustments account for fluctuations in market conditions and energy pricing, ensuring the agreement remains fair and commercially viable.
III. Duration and Termination
Term of Agreement: [Specify Duration] years from the Commercial Operation Date (COD).
Renewal Terms: Options to renew to be negotiated [Number of Years] years before the termination of the current term.
Early Termination Rights: Conditions for early termination include breach of contract, force majeure events, and mutual agreement.
The agreement's duration aligns with the project's operational life span, maximizing return on investment for [Your Company Name] and ensuring a stable energy supply for [Buyer's Company Name].
Renewal terms provide an opportunity for both parties to extend their collaboration, while early termination rights protect their respective business interests.
IV. Delivery and Performance Guarantees
Delivery Point: Electricity will be delivered to [Buyer's Company Name] at the interconnection point specified in the full Power Purchase Agreement.
Performance Guarantees: [Your Company Name] guarantees that the facility will meet or exceed the projected annual production of [Amount in MWh], subject to reasonable downtime for maintenance and repairs.
V. Environmental and Regulatory Compliance
Environmental Impact: [Your Company Name] will comply with all applicable environmental laws and regulations, including obtaining necessary permits and licenses.
Renewable Energy Credits (RECs): [Buyer's Company Name] will have the option to purchase RECs associated with the electricity generated by the facility.
VI. Reporting and Monitoring
Reporting Requirements: [Your Company Name] will provide monthly reports to [Buyer's Company Name] detailing the amount of electricity generated and delivered, along with any relevant performance data.
Monitoring: [Buyer's Company Name] will have the right to monitor the facility's performance and compliance with the agreement.
VII. Dispute Resolution
Negotiation: Any disputes arising from the agreement will be resolved through good faith negotiations between the parties.
Mediation: If negotiations fail, the parties will attempt to resolve the dispute through mediation before pursuing legal action.
VIII. Signatory
This Term Sheet is agreed to by:
[Your Company Name]
[Your Name]
[Buyer's Company Name]
[Buyer's Name]
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