Full formBusiness & Corporate
PPAstands forPower Purchase Agreement
Full Form of PPA
What is PPA?
A Power Purchase Agreement (PPA) is a legal contract between an electricity generator—such as a solar, wind, or thermal power plant—and a power purchaser, typically a distribution company (DISCOM), industrial consumer, or government entity in India. PPAs are fundamental to the country's renewable energy expansion, providing long-term revenue certainty that attracts private investment. They define key commercial terms including tariff rates (often fixed or staircasing), contract duration (frequently 25 years), quantity of electricity to be supplied, delivery schedules, and penalties for non-compliance. The Ministry of New and Renewable Energy (MNRE) and state electricity regulatory commissions often prescribe standard PPA frameworks to streamline procurement. These agreements are used in large-scale solar parks, wind farms, and increasingly in corporate renewable sourcing through open access. For competitive exams like UPSC and state-level energy commission tests, understanding PPAs is crucial for questions on power sector reforms, renewable energy policy, and climate commitments. India has leveraged PPAs to boost its renewable capacity beyond 170 GW, with further auctions targeting 500 GW by 2030. The agreements also incorporate grid connectivity requirements, termination clauses, and payment security mechanisms such as letters of credit or escrow accounts, ensuring bankability.
PPA का फुल फॉर्म
बिजली खरीद समझौता
Example
The Maharashtra Electricity Regulatory Commission approved a 25-year PPA between MSEDCL and a 500 MW solar park developer at a levellised tariff of ₹2.88 per unit.
PPA — frequently asked questions
What is the full form of PPA?
The full form of PPA is Power Purchase Agreement.
What is a PPA in solar energy?
In solar energy, a PPA is a long-term contract between a solar developer and a power buyer to purchase electricity at a predetermined tariff, usually for 20–25 years.
Who signs a PPA in India?
A PPA in India is typically signed by a power producer (e.g., a solar or wind farm owner) and a buyer such as a state distribution company (DISCOM), a private corporate, or a government agency.