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Carefully address these terms in a power purchase agreement

On Behalf of | Oct 29, 2024 | Energy Law |

A power purchase agreement, which is often used when renewable energy sources are placed on a consumer’s property, can be a cost-effective way for a customer to secure cheap electricity to run their operations. It can also provide tax incentives to the utility providing the energy to the consumer. But these agreements can be notoriously complicated, which is why it’s a good idea to familiarize yourself with their key terms. Hopefully then you’ll be positioned to effectively advocate for an agreement that supports your best interests.

Key terms to address in your power purchase agreement

If you want an effective power purchase agreement, then you need an ironclad contract. This includes properly addressing these issues:

  • The volume of energy to be provided within identified timeframes.
  • The term of the agreement.
  • The pricing structure that provides stability but also takes into account anticipated increase in energy costs.
  • How certain risks, such as fluctuations in energy generation, will be handled.
  • Basic rights and obligations of the parties, such as who is responsible for designing, building and paying for energy capture infrastructure.
  • How the agreement can be terminated, which should include a provision for natural events that damage energy capture equipment.
  • Assignment of rights under the agreement.
  • How dispute resolution will be handled.

Are you dealing with an issue related to a power purchase agreement?

Inadequately negotiating these terms can put you in a difficult spot. That’s why it’s best to carefully think through these matters and aggressively negotiate them to your advantage early on.

But regardless, if you’re facing an issue related to one of these agreements or any other aspect of energy law, you need to act fast to protect your interests. The best way to do that is to educate yourself more fully on these matters and seek out any support that you may need. Hopefully then you can develop a legal strategy that works for you and your unique set of circumstances.