A Power Purchase Agreement (PPA) in Singapore is a contract of utmost importance between an electricity generator and a buyer. It is an arrangement where the generator sells electricity to a buyer at a fixed price for a specified period. In the country, PPAs work best in the renewable energy sector to encourage the development of clean energy sources.
To learn more about what a Power Purchase Agreement in Singaporecan do, here is a list of everything you need to know about the contract.
Definition
A Power Purchase Agreement in Singaporeis a legal agreement between an electricity generator and a buyer, typically a utility company. The agreement outlines the terms and conditions for the sale of electricity and the responsibilities of both parties.
Duration
The duration of a Power Purchase Agreement in Singaporeis usually long-term, which ranges from a decade to 20 years. The length of the contract allows the generator to secure financing for their project and provides the buyer with stable energy and power source for an extended period.
Fixed Price
One of the most significant features to consider in a Power Purchase Agreement in Singapore is the fixed price of the electricity. At often times, companies negotiate the price at the beginning of the contract and remain fixed for the entire duration of the agreement. This stability allows the generator to secure financing for their project and provides the buyer with a predictable cost for energy.
Creditworthiness
Creditworthiness is a crucial factor to consider in a Power Purchase Agreement in Singapore. The buyer’s creditworthiness should be an essential consideration for the generator because they want to be sure that the buyer will be able to pay for the electricity throughout the duration of the contract.
Regulatory Framework
What did the adage say back then? The rules of the game should get clearly defined. The same applies to a PPA. The regulatory framework is another essential factor to consider in a Power Purchase Agreement in Singapore. The government’s policies and regulations surrounding renewable energy may also affect and significantly impact the viability and feasibility of the project.
Investment and Financing
Investment and financing are crucial for the success of any renewable energy project. A Power Purchase Agreement in Singapore provides a stable source of income for the generator, which can help attract investment and financing for the project.
A well-considered agreement is the foundation of a successful project. Learn more about Power Purchase Agreement in Singaporethrough Union Power. Visit their website today!
