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Virtual Purchase Power Agreement

Virtual Purchase Power Agreement Template for South Africa

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Key Requirements PROMPT example:

Virtual Purchase Power Agreement

"Need a Virtual Power Purchase Agreement for a 50MW solar project in Gauteng, South Africa, with settlements based on Eskom's standard tariff rate as the reference price, targeting financial close by March 2025."

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Document background
The Virtual Power Purchase Agreement (VPPA) is designed for use in the South African market where corporate entities seek to support renewable energy development while managing electricity costs. This document type has gained prominence as businesses look to meet sustainability goals without directly purchasing electricity. The agreement provides a financial hedge against electricity price fluctuations while supporting new renewable energy projects. Under South African law, these agreements must comply with both electricity regulation (particularly the Electricity Regulation Act) and financial markets legislation, as they function as derivative instruments. The document includes provisions for renewable energy certificates, financial settlements, and risk allocation, tailored to South Africa's unique energy market structure and regulatory requirements. It's particularly relevant in the context of South Africa's energy transition and the increasing corporate demand for renewable energy solutions.
Suggested Sections

1. Parties: Identification of the contracting parties - typically the renewable energy generator (seller) and the corporate buyer

2. Background: Context of the agreement, including project details and parties' objectives

3. Definitions: Detailed definitions of technical, financial, and operational terms used throughout the agreement

4. Term and Conditions Precedent: Duration of the agreement and conditions that must be met before the agreement becomes effective

5. Financial Settlement Mechanism: Core section detailing the strike price, reference price, settlement calculations, and payment obligations

6. Renewable Energy Certificates: Provisions regarding the creation, transfer, and ownership of renewable energy certificates

7. Metering and Reporting: Requirements for measuring and reporting energy generation and related data

8. Payment Terms: Detailed payment procedures, timing, and mechanisms

9. Force Majeure: Events excusing performance and related procedures

10. Default and Termination: Events of default, remedies, and termination procedures

11. Dispute Resolution: Procedures for resolving disputes between parties

12. Confidentiality: Provisions protecting confidential information

13. Representations and Warranties: Standard and specific warranties from both parties

14. General Provisions: Standard boilerplate clauses including notices, amendments, governing law

Optional Sections

1. Project Finance Provisions: Additional provisions required when project financing is involved, including lender rights and step-in provisions

2. Carbon Credits: Provisions regarding carbon credit allocation and trading, if applicable to the project

3. Grid Connection: Specific provisions regarding grid connection requirements and responsibilities, if relevant to the settlement mechanism

4. Market Disruption Events: Specific provisions for handling market disruptions that affect price references

5. Change in Law: Detailed provisions for handling regulatory changes, particularly relevant in emerging renewable energy markets

6. Performance Security: Requirements for performance bonds or other security if required by either party

7. Insurance: Specific insurance requirements beyond standard coverage

8. Forecasting and Scheduling: Detailed provisions for generation forecasting if required for settlement purposes

Suggested Schedules

1. Project Details: Technical specifications of the renewable energy facility

2. Pricing and Settlement Calculations: Detailed formulas and examples of settlement calculations

3. Reference Price Sources: Specified price sources and fallback mechanisms

4. Form of Renewable Energy Certificate: Template or specifications for renewable energy certificates

5. Operating Parameters: Technical and operational requirements for the facility

6. Form of Performance Security: Template for any required performance security documents

7. Metering Specifications: Technical requirements for metering and monitoring

8. Notices and Contact Information: Detailed contact information for all parties

9. Form of Settlement Statement: Template for monthly/periodic settlement statements

10. Insurance Requirements: Detailed insurance specifications and requirements

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Actual Delivered Energy
Affiliate
Agreement
Applicable Law
Billing Period
Business Day
Carbon Credits
Commercial Operation Date
Confidential Information
Contract Capacity
Contract Price
Contract Year
Credit Rating
Curtailment
Delivery Point
Dispute
Effective Date
Electricity
Environmental Attributes
Eskom
Event of Default
Facility
Financial Close
Force Majeure Event
Generation License
Good Industry Practice
Governmental Authority
Grid
Grid Code
Grid Connection Agreement
Initial Delivery Date
Insolvency Event
Interconnection Facilities
Lenders
Market Disruption Event
Market Operator
Market Reference Price
Material Adverse Effect
Metering System
NERSA
Net Energy
Operating Parameters
Party/Parties
Payment Date
Performance Security
Planned Maintenance
Project
Project Documents
Prudent Operating Practice
Reference Price Source
Renewable Energy Certificates
Renewable Energy Facility
Replacement Price
Required Permits
Settlement Amount
Settlement Period
Settlement Statement
Site
Strike Price
System Operator
Term
Termination Date
Trading Day
Trading Interval
Transfer Rights
Transmission System
Unit Contingent
Variable Settlement Amount
Clauses
Interpretation
Definitions
Term and Duration
Conditions Precedent
Financial Settlement
Payment Terms
Reference Price Mechanism
Energy Generation Obligations
Metering and Measurement
Renewable Energy Certificates
Environmental Attributes
Force Majeure
Change in Law
Default and Termination
Liability and Indemnification
Insurance
Dispute Resolution
Confidentiality
Assignment and Transfer
Notices
Representations and Warranties
Performance Security
Grid Connection
Market Disruption
Carbon Credits
Regulatory Compliance
Records and Audit
Anti-corruption
Boilerplate
Data Protection
Governing Law
Project Finance
Tax
Environmental Compliance
Reporting Requirements
Relevant Industries

Renewable Energy

Manufacturing

Mining

Financial Services

Technology

Retail

Industrial

Agriculture

Commercial Real Estate

Data Centers

Healthcare

Telecommunications

Relevant Teams

Legal

Finance

Procurement

Sustainability

Risk Management

Treasury

Operations

Environmental Compliance

Energy Management

Commercial

Trading

Relevant Roles

Chief Financial Officer

Head of Sustainability

Energy Manager

Legal Counsel

Procurement Director

Risk Manager

Treasury Manager

Environmental Compliance Manager

Operations Director

Commercial Director

Power Purchase Agreement Manager

Renewable Energy Project Manager

Energy Trading Manager

Sustainability Director

Chief Legal Officer

Industries
Electricity Regulation Act 4 of 2006: Establishes the framework for electricity regulation in South Africa, including licensing requirements and the role of NERSA (National Energy Regulator of South Africa)
Financial Markets Act 19 of 2012: Regulates financial markets and securities trading, relevant for the financial settlement aspects of VPPAs as they function as derivative instruments
Companies Act 71 of 2008: Governs corporate entities and their operations, relevant for parties entering into the VPPA and their corporate obligations
Consumer Protection Act 68 of 2008: Provides consumer protection framework, particularly relevant if one party is classified as a consumer under the Act
National Energy Act 34 of 2008: Ensures diverse energy resources are available in sustainable quantities at affordable prices
Income Tax Act 58 of 1962: Governs taxation implications of the VPPA, including treatment of payments and potential carbon tax considerations
Competition Act 89 of 1998: Regulates market competition and prevents anti-competitive practices in power purchase agreements
Electronic Communications and Transactions Act 25 of 2002: Relevant for electronic contracting and digital signatures if the VPPA is executed electronically
Protection of Personal Information Act 4 of 2013: Governs the handling of personal information in the contract and related communications
Carbon Tax Act 15 of 2019: May impact pricing and financial calculations in the VPPA, particularly regarding renewable energy certificates and carbon credits
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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