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Bilateral Power Purchase Agreement for South Africa

Bilateral Power Purchase Agreement Template for South Africa

A comprehensive legal agreement governed by South African law that establishes the terms and conditions for the sale and purchase of electrical power between an independent power producer and a power purchaser. The agreement addresses crucial aspects including pricing mechanisms, delivery obligations, technical specifications, performance standards, and regulatory compliance requirements under NERSA regulations. It incorporates specific provisions for the South African energy market context, including grid code compliance and relevant environmental regulations.

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What is a Bilateral Power Purchase Agreement?

The Bilateral Power Purchase Agreement (PPA) is a fundamental document in South Africa's energy sector, used to establish long-term electricity supply arrangements between independent power producers and purchasers. This agreement type has gained particular significance in South Africa's evolving energy landscape, especially with the country's push toward independent power production and renewable energy integration. The document must comply with South African electricity regulations, particularly the Electricity Regulation Act and NERSA requirements, while addressing critical commercial aspects such as pricing, supply obligations, and technical standards. PPAs are essential for project financing and typically form the cornerstone of power project development, providing certainty for both generators and off-takers in the South African market.

What sections should be included in a Bilateral Power Purchase Agreement?

1. Parties: Identification of the power producer and the purchaser, including their legal details and representatives

2. Background: Context of the agreement, including facility details and purpose of the arrangement

3. Definitions and Interpretation: Detailed definitions of terms used in the agreement and rules of interpretation

4. Sale and Purchase Obligations: Core obligations regarding the sale and purchase of electricity, including minimum take-or-pay provisions

5. Term and Effective Date: Duration of the agreement, including conditions precedent and effective date

6. Facility Requirements: Technical specifications and requirements for the generation facility

7. Metering and Testing: Requirements for measuring electricity delivery and testing procedures

8. Pricing and Payment Terms: Tariff structure, billing procedures, and payment terms

9. Operating Procedures: Day-to-day operational requirements and protocols

10. Performance Security: Requirements for performance bonds or other security arrangements

11. Force Majeure: Events constituting force majeure and consequent rights and obligations

12. Default and Termination: Events of default, cure periods, and termination rights

13. Dispute Resolution: Procedures for resolving disputes, including arbitration provisions

14. Governing Law: Application of South African law and jurisdiction

15. General Provisions: Standard boilerplate clauses including notices, amendments, and assignments

What sections are optional to include in a Bilateral Power Purchase Agreement?

1. Carbon Credits: Provisions regarding carbon credits or other environmental attributes, used when renewable energy is involved

2. Grid Connection: Specific provisions regarding grid connection requirements, used when the producer is responsible for grid connection

3. Construction and Development: Required for new facilities that are not yet operational

4. Fuel Supply: For thermal power plants requiring fuel supply arrangements

5. Step-in Rights: Rights of lenders or the purchaser to step in and operate the facility, included when required by financing arrangements

6. Local Content Requirements: Provisions regarding local content and economic development requirements, if applicable under regulations

7. Insurance: Detailed insurance requirements beyond standard coverage

8. Change in Law: Specific provisions for handling regulatory changes affecting the project

What schedules should be included in a Bilateral Power Purchase Agreement?

1. Facility Description: Detailed technical specifications of the generation facility

2. Testing Procedures: Procedures for acceptance testing and periodic performance testing

3. Metering Specifications: Technical requirements for metering equipment and procedures

4. Tariff Schedule: Detailed pricing mechanisms, calculations, and adjustments

5. Operating Procedures Manual: Detailed procedures for day-to-day operations

6. Performance Standards: Specific performance requirements and guaranteed parameters

7. Form of Performance Security: Template for performance bond or security arrangement

8. Interconnection Requirements: Technical specifications for grid connection

9. Planned Maintenance Schedule: Annual maintenance schedule and procedures

10. Emergency Procedures: Protocols for emergency situations and communications

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok成人版 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

South Africa

Cost

Free to use

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