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Power Purchase Agreement Sri Lanka

Power Purchase Agreement (PPA) Sri Lanka: Everything You Need to Know

Power Purchase Agreements (PPAs) are important legal contracts that allow renewable energy producers to sell their energy to the grid at a fixed price for a fixed period. PPAs have become increasingly popular, especially in countries like Sri Lanka, where the demand for power is high, and the government is pushing for renewable energy sources. In this article, we will cover everything you need to know about PPA in Sri Lanka.

What is a Power Purchase Agreement?

A Power Purchase Agreement (PPA) is a legal contract that outlines the terms and conditions of the sale of electricity between a power producer and a power purchaser. The agreement usually includes details such as the price of electricity, the duration of the contract, and the terms of payment.

PPAs are important for renewable energy producers since they provide a guaranteed income stream for the energy produced. This, in turn, helps to attract financing for new projects and allows renewable energy producers to sell their energy to the grid at a competitive rate.

Why is PPA important in Sri Lanka?

Sri Lanka is heavily dependent on thermal power, which accounts for over 50% of the country`s power generation. However, the government has set a target to achieve 70% renewable energy by 2030. This has led to an increase in the development of renewable energy projects in the country.

PPAs are crucial for the development of renewable energy projects in Sri Lanka, as they provide a guaranteed income stream for the energy produced. This, in turn, helps to attract financing for new projects and allows renewable energy producers to sell their energy to the grid at a competitive rate.

What are the key elements of a PPA in Sri Lanka?

The key elements of a PPA in Sri Lanka are as follows:

1. Term and Termination: The PPA will specify the term of the agreement and the conditions for termination.

2. Capacity and Output: The PPA will outline the capacity and output of the renewable energy project.

3. Electricity Price: The PPA will specify the price of electricity that the renewable energy producer will receive for the energy produced.

4. Payment Terms: The PPA will outline the payment terms, including the frequency of payments and the conditions for payment.

5. Force Majeure: The PPA will outline the conditions for force majeure events that may impact the project.

6. Governing Law and Dispute Resolution: The PPA will specify the governing law and the dispute resolution mechanism.

Conclusion

PPAs are critical for the development of renewable energy projects in Sri Lanka, as they provide a guaranteed income stream for the energy produced. With the government`s push towards renewable energy, the development of PPAs is expected to increase in the coming years. As a result, renewable energy producers should ensure that they understand the key elements of a PPA and seek competent legal advice to ensure that their interests are protected.