Third Party Power Purchase Agreement Template for England and Wales

A Third Party Power Purchase Agreement (PPA) is a contractual arrangement that enables electricity generators to sell power directly to end consumers through a licensed supplier intermediary. Under England and Wales law, this structure ensures compliance with electricity market regulations while providing renewable energy generators with long-term revenue certainty and offering consumers stable electricity pricing.

When do you need this document?

You need this agreement when establishing direct electricity procurement relationships between renewable energy generators and commercial or industrial consumers. Corporate buyers seeking to meet sustainability targets often use these agreements to source clean energy directly from wind, solar, or other renewable projects. Manufacturing companies, data centres, and large retailers frequently enter these arrangements to secure predictable energy costs while demonstrating environmental responsibility. The agreement is also essential when restructuring existing electricity supply arrangements to incorporate renewable energy sources or when establishing new renewable energy projects requiring long-term revenue contracts.

Key legal considerations

The pricing mechanism represents the most critical element, typically involving either fixed prices, indexed pricing, or Contract for Difference structures aligned with government CfD schemes. Volume commitments must specify minimum and maximum electricity quantities, with provisions for balancing charges and imbalance risks. Risk allocation clauses should address force majeure events, regulatory changes, and technology performance risks. The agreement must clearly define responsibilities for renewable energy certificates, carbon credits, and sustainability reporting obligations. Termination provisions should protect all parties while ensuring compliance with long-term financing requirements for generation assets.

Legal requirements in England and Wales

All Third Party PPAs must involve a licensed electricity supplier as intermediary, as direct sales between generators and consumers violate the Electricity Act 1989. The licensed supplier assumes regulatory obligations including customer protection duties and market settlement responsibilities. Contracts must comply with OFGEM's supply licence conditions and industry codes, particularly the Grid Code for technical requirements and the Balancing and Settlement Code for market operations. The agreement should reference the Climate Change Act 2008 requirements for carbon reporting and sustainability commitments. Recent Energy Act 2013 provisions regarding electricity market reform must be considered, particularly for agreements involving Contract for Difference mechanisms or capacity market participation.