A power purchase agreement (AAE) provides payment flow for a build-own transfer (BOT) or a concession project for an independent power plant (PPI). It is between the «buyer» buyer (often a state electricity supplier) and a private electricity producer. The AAE described here is not suitable for electricity sold on world markets (see deregulated electricity markets below). This summary focuses on a basic thermal charge facility (the problems would be slightly different for thermal or hydroelectric power plants in the central area or in the state-of-the-art facilities). There are many moving parts that influence the future of electricity generation in emerging countries. Unlike today`s independent power project models, which included standardized paid contracts, today`s market requires more innovative incentives to ensure better availability, better performance and more attractive and sustainable fuel source blends. There is an urgent need for the economies of all developing countries to master the key tools, models and lessons they have learned to transform and strengthen the current electricity sector. These include the latest models in the negotiation of power purhase agreements (ASA), the design and management of new competitive electricity markets, as well as obtaining the right mix of renewable energy sources. French contracts for the purchase of standard electricity (Indicative models of electricity obligation contracts) for small installations and renewable energy sources, under the 2000 Act (Law 2000-108 of February 10, 2000) and the corresponding decree law (decree 2000-877 of September 7, 2000) and the 2001 decree (Decret-Nr.2001-410 of 10 May 2001), whose grid and distributors must source electricity from small generators and wind power – Arré du June 8, 2001 setting the conditions for the purchase of electricity by facilities using mechanical wind energy as referred to Article 2 (2o) of Decree No. 2000-1196 of December 6, 2000. Physical PPAs refer to the purchase of energy at the reference point (the receiving point of production). Typically, a distribution company provides energy to its many customers via existing transmission lines.
A physical PPA customer receives physical delivery (or property) of energy on the grid. Electricity supply contracts ensure that once capital investments are completed, the project generates a return by reducing liquidity uncertainty. AAEs are often seen as a central document in the development of independent power generation units (power plants).