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Power Purchase Agreement (PPA)

A Purchase Power Agreement (PPA), also called an electric power agreement, is a long-term contract that enables businesses to buy renewable energy in volumes from an independent power producer (IPP).

The PPA is an agreement between two parties: the seller or generator and the buyer, typically a utility or large power buyer or trader. The PPA defines the terms of the sale, including when the project will begin, the delivery schedule, billing and payment terms, and termination. The buyer purchases power from a seller that will handle all aspects of the project, from the financing through commissioning. In a PPA agreement, the seller builds or installs the technology, such as a solar or wind farm, and the buyer purchases the energy by the kilowatt-hour (kWh). It is advantageous for companies to purchase energy wholesale from developers on the same grids that operate their data centers.

Some data centers, including Stream Data Centers, offer energy procurement services to make sure customers get the best possible pricing, contracts and billing terms. Stream evaluates optimal energy rates in all markets including from renewable energy sources.

In the United States, PPAs are often regulated by the Federal Energy Regulatory Commission (FERC).