Professional Documents
Culture Documents
Direct Parties
Seller
Buyer
Indirect Parties
Financiers/Lenders
Government
Transmission services provider
Matters governed by the PPA - 1
Operating procedures
Operational targets
Sets out penalties for operational defaults
Commissioning and Testing
Operation and Dispatch Procedures
Repair and Maintenance
Metering
Matters governed by the PPA - 2
Bankability
Proper Risk Allocation Each allocated to party
best placed to manage it
Security of Cash Flow
Repayment of project debt within tenure of PPA
Step-in/buyout rights for lenders
Financial viability of off-taker
Key issues in PPA negotiations
Agree on implementation Schedule
Procedures include:
Commissioning and testing procedures
Operation and dispatch procedures
Metering procedures
Maintenance procedures
The procedures define level of performance
expected and how this can be measured
important, especially where capacity payments
or take or pay arrangements are involved
Operational targets and penalties for
default
Other Charges
Fuel Charge - pass through, efficiency-
adjusted
Any other Pass through costs
Start up charges
Level and Structure of Tariff - 4
Results matter:
Dont settle for less than you could achieve
without an agreement.
Seek to improve BATNA.
Focus on interests
Be creative
For sustainable agreements, avoid one-
upmanship
Look for differences in relative priorities
Seek to achieve as much of your interests as
you can, while giving the other side more than
their BATNA
Reach implementable or sustainable
agreements:
Substantive Needs:
the material things and issues people are
negotiating about
can be both tangible, e.g. money, time, rights,
possessions; or intangible, e.g. respect,
consideration. People are very often just
focused on what they need to negotiate and
how to negotiate isnt seen as really that
important.
Negotiation steps - 1