Common Contracts

Power Purchasing Agreements in Modern Power System

May 28th, 2011

• Filed
  May 28th, 2011

Abstract: Power Purchasing Agreements (PPAs) are the recent contracts between Generation Companies (GENCOs) and Independent System Operator (ISO). After restructuring in power system, lack of motivations for Independent Power Producers (IPPs) to partnership in power generation and long term maintaining energy have affect the long horizon expansion planning. In this area, long term contracts can help the market entities to hedging their risks in satisfying the future demands and ensuring the return of their investment cost. From an IPP point of view, clarifying the rate of return of investment has an important role in his financial decision making. In competitive power market, each GENCO would offer in the market and some of them could exercise market power in power market. One of the proposed ways to controlling the market power is PPA. In this paper the PPA and some proposed PPAs are introduced and clarifying the weak and strong point of the PPAs are presented.