TYPES OF PPA: A systematic classification of power purchase agreements and Indigenous peoples’ PPAs

1. Basic principles of classification PPA

the Unified Universal Classification PPA does not exist. One contract can simultaneously relate to several types. For example: corporate + Physical + off-site + Solar + pay-as-produced + fixed price + Term 20 years.

2. Types PPA by type of buyer

Utility PPA

The buyer is an energy sales, utility, regulated or state-owned energy company. A classic model for large generating projects and project financing.

Corporate PPA

The buyer is a private corporation or group of companies. It is used to fix the price, reduce the carbon footprint and ensure long-term supply.

Government PPA

The buyer or guarantor is a state, region, municipality or government agency.

Community PPA

The buyer is a municipality, energy cooperative, territorial community or association of residents.

Aggregated PPA

Several buyers combine demand through an aggregator, cooperative, or single contract.

Merchant / Partially Merchant PPA

Part of the volume is fixed at PPA, and part is sold on the market. Market risk remains partly with the manufacturer.

3. Types PPA by method of physical and financial supply

Physical PPA

Physical supply of electricity to the buyer through the electrical network.

Direct Wire PPA

The manufacturer is connected to the consumer by a direct line. Suitable for industrial facilities, microgrids and remote settlements.

On-site PPA

Generation is located directly on the buyer’s site — for example, a solar station on the roof or the territory of the enterprise.

Off-site PPA

The generating object is located remotely, and electricity is transmitted through a common network.

Sleeved PPA

Between the producer and the final buyer involves an energy supply or trading company that provides supply, balancing and settlement.

Virtual / Synthetic PPA

Physical delivery to the buyer may be absent. The parties enter into a financial agreement for the difference between the agreed and the market price.

Cross-border PPA

The manufacturer and the buyer are located in different countries. There are additional issues of cross-border transfer, currency, taxation and applicable law.

4. Types PPA on obligations of the parties

Take-and-pay

The buyer pays only for the actually received electricity.

Take-or-pay

The buyer is obliged to accept the agreed amount or pay it regardless of the actual consumption.

Pay-as-produced

The buyer accepts all the electricity actually produced. Most typical for wind and solar projects.

Baseload PPA

The supplier is obliged to provide a permanent supply profile. The missing volume can be bought in the market.

Pay-as-consumed

The volume of purchases is tied to the actual consumption of the buyer.

Availability-based PPA

Payment depends on the readiness of the facility for production and the availability of capacity.

Capacity PPA

Separately paid power, readiness or reserve, and electricity - by an independent formula.

5. Types PPA by price mechanism

Fixed-price PPA

Fixed price for the whole period or for individual periods.

Escalating PPA

The price is indexed annually by fixed percentage, inflation or other index.

Indexed PPA

The price depends on market indices, fuel cost, inflation, currency or other indicators.

Market-price PPA

The price is mainly determined by the current market value of electricity.

Floor-price PPA

A minimum price is set below which the calculations are not omitted.

Collar PPA

The price corridor with minimum and maximum boundaries is determined.

Contract for Difference (CfD)

The difference between the agreed price of performance and the market price is compensated by one of the parties.

Cost-plus PPA

The buyer compensates for the confirmed costs plus the agreed return.

Hybrid-price PPA

Combines fixed, market, indexed and other price components.

6. Types PPA by generation technology

Solar PPA

Solar power. Insolation, seasonality, degradation of modules and daily production profile are taken into account.

Wind PPA

Wind power. Significant wind resource, forecasting and restrictions of issuance.

Hydro PPA

Hydropower. Water quality, hydrology, ecological runoff and water rights are taken into account.

Biomass / Biogas PPA

Generation from biomass, biogas and agricultural waste.

Waste-to-Energy PPA

Energy from waste. It is often associated with contracts for the reception and disposal of waste.

Geothermal PPA

Geothermal generation. Geological and drilling risks are significant.

Thermal PPA

Gas, coal, diesel and other thermal stations.

Nuclear PPA

Long-term contracts for nuclear generation with increased requirements for safety, guarantees and regulation.

Storage / Battery PPA

Contracts related to energy storage, reserve, balancing and load transfer.

Hybrid PPA

Combines several technologies: solar + wind, generation + drive, etc.

Green Hydrogen PPA

Supply of renewable electricity for the production of green hydrogen with energy origin requirements.

7. Types PPA by project stage and deadline

Pre-construction PPA

It is concluded before construction and is used to attract project financing.

Operational PPA

This is for an already operating power plant.

Short-term PPA

A short-term contract is usually for several years.

Long-term PPA

Long-term contract for 10–30 years and more.

Bridge PPA

A transitional contract before connecting to the main system, concluding a permanent PPA or the beginning of another mechanism.

8. Special PPA

Microgrid PPA

For local and isolated power systems with generation, storage and distribution network.

Community Energy PPA

For collective energy supply to settlements, cooperatives and municipalities.

Public-Private PPA

PPA within a wider PPP structure, concession, BOT, BOO or other project model.

Social PPA

Agreement supplemented by social obligations: preferential tariffs, employment, access to energy and public investment.

Environmental / Impact-linked PPA

Payments or terms of the contract are related to environmental performance, emissions, ecosystem restoration or other effects.

Indigenous PPA

A special model for projects involving indigenous peoples, combining the energy compact with land, social, cultural and procedural guarantees.

9. PPA Indigenous peoples (Indigenous PPA / IP-PPA)

Indigenous PPA is not a single international legal form, but a special project architecture in which an indigenous people, community, tribal body, cooperative, trust or company owned by them is not only the recipient of compensation, but the owner, co-owner, manufacturer, buyer, land user, management participant or recipient of a long-term share of the economic result.

9.1. Main models Indigenous PPA

Indigenous-owned PPA

The community or company owns the entire project.

Indigenous majority-owned PPA

The indigenous people retain a controlling stake in the project company.

Indigenous minority equity PPA

The community receives a minority share, dividends and corporate rights.

Joint Venture PPA

A joint project of the community, the energy company and investors.

Community Offtake PPA

The community acts as a buyer of electricity for settlements and public facilities.

Microgrid Indigenous PPA

Local microgrid for remote territory with RES, storage and backup generation.

Direct-wire Indigenous PPA

Direct supply of energy to community facilities or to a partner industrial consumer.

Host Community PPA

The project of an outside investor is located on the territory of the community, and the rights and benefits of the community are fixed contractually.

Benefit-sharing PPA

Some of the proceeds or payments are automatically sent to a public, environmental or generational fund.

Royalty-linked PPA

The community receives royalties for each MW·h or a percentage of revenue.

Preferential Tariff PPA

A preferential or social price for electricity is set for the community.

Aggregated Indigenous PPA

Several communities combine consumption, generation, or investment into a single entity.

Indigenous Corporate PPA

The indigenous company sells electricity to an external corporate buyer.

Sovereign / Tribal PPA

The contract is concluded with a recognized body of tribal or traditional self-government.

Indigenous Green Attributes PPA

Together with electricity, the rights to environmental attributes, certificates and emission reduction results are distributed.

9.2. Contractual architecture Indigenous PPA

• The FPIC Protocol is a free, prior and informed consent protocol.
• An Indigenous Peoples Agreement is a framework agreement with a community or people.
• The Power Purchase Agreement is a power purchase agreement.
• Land Use Agreement - Land Use Agreement and Rights of Use.
• A benefit sharing agreement is a benefit sharing agreement.
• Shareholders/Equity Agreement is a community-shared agreement.
• Environmental and Social Management Plan: Environmental and Social Responsibility.
• The Cultural Heritage Agreement protects sacred sites, heritage and traditional knowledge.
• Employment and Procurement Agreement - Local employment, training and procurement.
• Grievance and Dispute Resolution Agreement: Mechanisms for complaints and dispute resolution.

9.3. Key principles IP-PPA

• Recognition of the rights of indigenous peoples to territory and traditional environmental management.
• Representative authority and transparency of decision-making.
• Free, prior and informed participation until irreversible decisions are made.
• Participation in the ownership and management of the project.
• Minimum guaranteed income and long-term benefit sharing.
• Royalties, dividends, preferential energy and social investments.
• Maintain access to traditional territories and natural resources.
• Protection of cultural and spiritual heritage.
• Independent environmental and social monitoring.
• Public or community-accessible production and payment accounting.
• Restrictions on the transfer of the project to third parties without agreed procedures.
• Mandatory reclamation and financial support for the decommissioning of the facility.

10. Recommended classification PPA for system ECO-PPA

For practical work, it is advisable to use a multidimensional classification, where each project receives its own passport PPA at seven coordinates:

1. Who's the buyer?

2. How is the delivery carried out?

3. How are large risks distributed?

4. How is the price formed?

5. What technology is used?

6. At what stage and time is the contract concluded?

7. What special social, environmental, territorial or international conditions apply?

11. Matrix types PPA

12. Result

PPA It should not be considered as one type of contract, but as a designer of design architecture. Properly structured PPA It brings together commercial contracts, network supply rules, pricing mechanisms, risk allocation and, where appropriate, social, environmental, land and international obligations. For ECO-PPA The Hybrid is particularly promising PPA, Community PPA, Social PPA, Microgrid PPA and Indigenous PPA, because they link energy production to measurable social and environmental outcomes.