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Energy Purchase Agreement
I need an energy purchase agreement for a solar power project, specifying a 20-year term with a fixed price per kilowatt-hour, including clauses for performance guarantees, penalties for underperformance, and options for contract renewal or termination. The agreement should comply with UAE regulations and include provisions for dispute resolution.
What is an Energy Purchase Agreement?
An Energy Purchase Agreement sets up a long-term arrangement where a power producer sells electricity to a buyer in the UAE, typically for 20-25 years. These contracts are crucial for renewable energy projects, especially solar installations across Dubai and Abu Dhabi, as they guarantee stable revenue for producers while ensuring reliable power supply for purchasers.
Under UAE energy regulations, these agreements spell out essential terms like pricing mechanisms, minimum energy output requirements, and delivery points. They're particularly important for major initiatives like the Mohammed bin Rashid Solar Park, where developers need secure revenue streams to finance their projects. The agreements also help the UAE meet its clean energy targets under Vision 2030.
When should you use an Energy Purchase Agreement?
Energy Purchase Agreements become essential when developing large-scale power generation projects in the UAE, especially renewable energy installations. These agreements are vital for securing project financing from UAE banks and international lenders, who require guaranteed revenue streams before funding solar parks, wind farms, or other energy facilities.
Consider implementing an EPA when launching power projects under the UAE's Clean Energy Strategy 2050. The agreement helps lock in long-term revenue, manage operational risks, and establish clear performance standards. It's particularly valuable for independent power producers participating in government initiatives like Dubai's DEWA solar program or Abu Dhabi's green energy projects.
What are the different types of Energy Purchase Agreement?
- Power Purchase Contract: Standard agreement for traditional power generation facilities, used mainly by UAE utility companies for conventional energy sources
- Power Purchase Agreement Solar: Specialized version for solar projects under UAE's renewable initiatives, including specific performance metrics for solar generation
- Virtual Power Purchase Agreement: Financial instrument where energy isn't physically delivered, popular among UAE corporations seeking renewable energy credits
- Commercial Solar PPA: Tailored for business rooftop installations, common in Dubai's commercial districts
- Utility PPA: Large-scale agreements between independent power producers and government utilities like DEWA or ADWEA
Who should typically use an Energy Purchase Agreement?
- Independent Power Producers (IPPs): Private companies developing and operating power plants in the UAE, particularly renewable energy facilities like solar parks
- Government Utilities: Organizations like DEWA and ADWEA that purchase power for distribution across the emirates
- Legal Counsel: Both in-house and external lawyers who draft and negotiate Energy Purchase Agreements, ensuring compliance with UAE energy regulations
- Financial Institutions: UAE banks and international lenders who require these agreements as security for project financing
- Technical Consultants: Engineers and energy specialists who advise on performance specifications and operational requirements
- Regulatory Bodies: UAE energy authorities that oversee and approve these agreements to ensure market stability
How do you write an Energy Purchase Agreement?
- Project Details: Document the facility type, capacity, location, and expected commercial operation date for your UAE energy project
- Technical Specifications: Gather detailed performance metrics, maintenance schedules, and grid connection requirements
- Pricing Structure: Define tariff rates, payment terms, and any adjustment mechanisms aligned with UAE energy regulations
- Party Information: Collect corporate documents, licenses, and authorizations from both generator and purchaser
- Regulatory Compliance: Check current UAE clean energy policies and required permits
- Risk Assessment: Map out force majeure events, performance guarantees, and termination conditions
- Review Process: Use our platform to generate a compliant draft, then validate technical and commercial terms internally
What should be included in an Energy Purchase Agreement?
- Parties and Project: Full legal names, facility details, and UAE commercial registration numbers
- Energy Supply Terms: Detailed specifications of power delivery, minimum output guarantees, and grid connection points
- Payment Structure: Tariff calculations, invoicing cycles, and currency specifications in AED
- Performance Standards: Technical requirements aligned with UAE grid codes and DEWA/ADWEA specifications
- Force Majeure: UAE-specific events and remedies, including regional weather conditions
- Dispute Resolution: UAE courts or DIAC arbitration clauses with specific jurisdiction details
- Assignment Rights: Transfer conditions following UAE commercial law requirements
- Termination Provisions: Default triggers and compensation mechanisms under local regulations
What's the difference between an Energy Purchase Agreement and a Purchase Agreement?
Energy Purchase Agreements differ significantly from Purchase Agreement in both scope and application within the UAE energy sector. While both involve buying and selling, their fundamental purposes and structures serve distinct needs in the market.
- Duration of Contract: Energy Purchase Agreements typically span 20-25 years, while Purchase Agreements are often one-time or short-term transactions
- Subject Matter: EPAs deal with ongoing electricity supply and generation, while Purchase Agreements cover tangible assets or goods
- Payment Structure: EPAs feature complex tariff mechanisms and performance-based payments, versus straightforward payment terms in Purchase Agreements
- Regulatory Framework: EPAs must comply with UAE energy laws and grid requirements, while Purchase Agreements follow general commercial law
- Risk Allocation: EPAs include detailed provisions for supply interruptions and force majeure specific to power generation, unlike standard Purchase Agreements
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