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Contract For Differences Ppa for the United Kingdom

Contract For Differences Ppa Template for England and Wales

A Contract for Differences PPA under English and Welsh law is a sophisticated power purchase agreement that incorporates a price stabilization mechanism. It provides long-term price certainty to renewable energy generators while protecting buyers from price volatility. The agreement operates within the UK's CfD framework, establishing payment mechanisms based on the difference between the market reference price and an agreed strike price. This document type is fundamental to the UK government's renewable energy strategy and is governed by the Energy Act 2013 and associated regulations.

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Contract For Differences Ppa

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What is a Contract For Differences Ppa?

The Contract For Differences PPA is designed for use in the English and Welsh renewable energy market where parties seek to manage price volatility while ensuring stable returns for generators. This document type emerged from the UK's Electricity Market Reform and is particularly relevant for new renewable energy projects seeking revenue certainty. The agreement encompasses detailed provisions for price calculations, payment mechanisms, and operational requirements, while adhering to the regulatory framework established by the Energy Act 2013 and overseen by the Low Carbon Contracts Company. It's particularly suitable for large-scale renewable energy projects requiring significant investment and long-term revenue security.

What sections should be included in a Contract For Differences Ppa?

1. 1. Parties: Identification of contracting parties and their legal status

2. 2. Background: Context of the agreement and relationship between parties

3. 3. Definitions: Key terms used throughout the agreement

4. 4. Term and Duration: Contract period and renewal provisions

5. 5. Payment Mechanism: Strike price, reference price, and difference payments calculation

6. 6. Metering Requirements: Specifications for measuring electricity generation

7. 7. Generator Obligations: Core obligations of the generating party

8. 8. Buyer Obligations: Core obligations of the purchasing party

9. 9. Default and Termination: Events of default and termination procedures

What sections are optional to include in a Contract For Differences Ppa?

1. Change in Law Provisions: Additional clauses addressing the impact of regulatory changes, typically included for longer-term contracts or high-value installations

2. Force Majeure: Provisions dealing with unforeseeable circumstances preventing contract performance, included when requested by parties or for higher-risk projects

3. Direct Agreement Rights: Clauses establishing lender step-in rights, included when project financing is involved

What schedules should be included in a Contract For Differences Ppa?

1. Schedule 1: Facility Description: Technical specifications of the generating facility

2. Schedule 2: Testing Procedures: Commissioning and testing requirements

3. Schedule 3: Calculation Methodology: Detailed payment calculations and examples

4. Schedule 4: Form of Direct Agreement: Standard form agreement for lenders

5. Appendix A: Metering Specifications: Detailed technical requirements for metering

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

England and Wales

Publisher

Ƶ

Cost

Free to use
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Industries

Energy Act 2013: Primary legislation establishing the legal framework for Contracts for Differences (CfDs), setting out basic requirements for eligible generators and defining roles of counterparties

Electricity Act 1989: Fundamental legislation governing electricity market regulation, licensing requirements, and grid connection provisions

The Contracts for Difference (Allocation) Regulations 2014: Detailed regulations covering CfD allocation process, eligibility criteria, and administrative procedures

OFGEM Regulations: Regulatory framework and guidance from the Office of Gas and Electricity Markets governing energy market operations

National Grid ESO Requirements: Technical and operational requirements set by the Electricity System Operator for grid connection and operation

Balancing and Settlement Code (BSC): Industry code defining the rules and governance for electricity balancing and settlement in Great Britain

Grid Code: Technical code specifying the requirements for connection to and use of the National Electricity Transmission System

Contract Law: Common law principles governing formation and enforcement of contracts under English and Welsh law

Competition Act 1998: Legislation ensuring fair competition and preventing anti-competitive practices in energy markets

Financial Services and Markets Act 2000: Regulatory framework for financial services and markets, relevant for financial aspects of CfD contracts

Consumer Rights Act 2015: legislation protecting consumer rights, applicable if the PPA involves consumer-facing elements

Climate Change Act 2008: Framework for reducing greenhouse gas emissions and meeting climate change targets

Renewable Energy Regulations: Various regulations governing renewable energy generation, incentives, and obligations

Environmental Permitting Regulations: Regulations governing environmental permits and compliance for energy generation facilities

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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