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The Physical Power Purchase Agreement (PPA) is a crucial contract used in South Africa's energy market to establish legally binding arrangements between entities generating electricity and those purchasing it for physical delivery. This agreement type has become increasingly important with South Africa's energy market liberalization and the growing need for private power generation solutions. The document addresses both traditional and renewable energy sources, incorporating specific requirements under South African legislation including the Electricity Regulation Act and NERSA requirements. It is particularly relevant given the country's energy security challenges and the push for independent power production. The PPA covers all essential aspects of the power purchase arrangement, from technical specifications and delivery obligations to pricing mechanisms and risk allocation, while ensuring compliance with local regulatory requirements and grid connection standards.

1. Parties: Identification and details of the Power Producer and the Power Purchaser

2. Background: Context of the agreement, including facility details and purpose of the PPA

3. Definitions and Interpretation: Comprehensive definitions of terms used and rules of interpretation

4. Sale and Purchase Obligations: Core obligations regarding the sale and purchase of electricity

5. Term and Effectiveness: Duration of the agreement, conditions precedent, and effective date

6. Construction and Development: Requirements for facility construction, testing, and commissioning

7. Operation and Maintenance: Standards for operating and maintaining the generation facility

8. Metering and Testing: Requirements for measuring delivered electricity and testing procedures

9. Billing and Payment: Payment terms, invoicing procedures, and dispute resolution for payments

10. Grid Connection and Transmission: Requirements for connection to grid and transmission arrangements

11. Force Majeure: Definition of force majeure events and their consequences

12. Change in Law: Provisions dealing with regulatory changes affecting the agreement

13. Default and Termination: Events of default, remedies, and termination procedures

14. Liability and Indemnification: Allocation of risks and responsibilities between parties

15. Insurance: Required insurance coverage for both parties

16. Assignment and Change of Control: Rules for transferring rights and obligations under the agreement

17. Confidentiality: Protection of confidential information

18. Dispute Resolution: Procedures for resolving disputes between parties

19. Governing Law: Application of South African law and jurisdiction

20. Notices: Procedures for formal communications between parties

21. General Provisions: Miscellaneous legal provisions including severability and entire agreement