Fillable Printable Standardised Power Purchase Agreement for Renewable Energy Generators

Standardised Power Purchase Agreement for Renewable Energy Generators

Standardised Power Purchase Agreement

for Renewable Energy Generators greater than

10 MW

Standardised PPA for large renewable energy generators (greater than 10 MW)

AGREEMENT FOR POWER PURCHASE

DATED

Between

(as “the Seller”)

- AND -

THE KENYA POWER AND LIGHTING COMPANY LIMITED

(as "the Buyer ")

POWER PURCHASE AGREEMENT

Standardised PPA for large renewable energy generators (greater than 10 MW)

THIS AGREEEMENT is made this ……………………..day of ……………………20…

BETWEEN

…………….a company incorporated in the Republic of Kenya [a limited partnership incorporated

under the Limited Partnerships Act, Chapter 30 of the Laws of Kenya] with its registered office at

……………………, and of Post office Box Number………..(hereinafter referred to as “the Seller”),

which expression shall, where the context so admits, include its successors in title and assigns) of

the one part ;

AND

THE KENYA POWER AND LIGHTING COMPANY LIMITED, a company incorporated in the

Republic of Kenya with its registered office at Stima Plaza along Kolobot Road in Nairobi and of Post

Office Box Number 30099 – 00100, Nairobi,(hereinafter referred to as “the Buyer” which expression

shall, where the context so admits include its successors and assigns” of the third part.

WHEREAS:

1. The Buyer is licensed to purchase, transmit, distribute and supply electricity in the Republic of

Kenya;

2. The Seller intends to construct a ……………..MW ……………..power generation plant at

……………… of which ……….is for captive use and the rest for sale to the Buyer and

3. The Seller and the Buyer have agreed to enter into an power purchase agreement (being this

Agreement) for the sale of ……..MW to the Buyer pursuant to the Feed – In – Tariffs Policy.

NOW IT IS AGREED AS FOLLOWS

1. DEFINITIONS AND INTERPRETATION

1 Defined Terms

In this Agreement, unless the context requires otherwise, the following words shall have the

following meanings –

“Appendix A”: Description of the Plant

“Appendix B (1)”: The standardised tariffs and escalators for purchase and sale of Net Electrical

Output applicable to this Agreement.

“Appendix B (2)”: The computation of Deemed Generated Energy Payments.

“Appendix C:” Designation of the Interconnection Facilities and Requirements

“Appendix D:” Contents of Seller’s Invoice

“Appendix E:” Designated address and contact persons for each Party.

“Appendix F:” Transfer Amount specified in Clause 11.3

“Appendix G:” Particulars of the Lenders

Standardised PPA for large renewable energy generators (greater than 10 MW)

Annual dependable output:

"Change in Law" means any of the following events occurring after the Signature Date, and which

despite the exercise of Prudent Operating Practice by the Seller or THE BUYER (i) results in a

material increase in the operating costs or capital expenditure incurred by the Seller in performing

its obligations under this Agreement or (ii) imposes requirements for the design, construction,

operation or maintenance of the Plant or the Buyer’s System that are materially more onerous than

the requirements in effect as of the Signature Date, and that affect the Seller's performance under

this Agreement, , or that affect the Buyer's performance under this Agreement:

a. a change in, or in the interpretation (by a governmental authority), application or

enforcement of, or the enactment or adoption of or promulgation, bringing into effect of,

repeal, amendment of, any legal requirement; or

b. any change in any authorization required in connection with this Agreement or any

additional requirements or conditions imposed by any governmental authority in connection

with the issuance, extension, replacement, variation or renewal of any authorization required

in connection with this Agreement provided that in respect of the issuance, extension,

replacement, variation or renewal of any authorization required in connection with this

Agreement, the Party requiring the relevant authorization has first diligently attempted to

obtain such authorization and if the processes required by such duty of diligence have not

been exhausted, such processes have been and are still being diligently pursued by that

Party;

“Commissioning:” Conduct of tests necessary to put a unit or the Plant (as the case may be) into

operation and the term “Commission” shall be construed accordingly;

"Deemed Generated Energy": The electrical energy expressed in kWh that as a result of the Buyer’s

System Interruption is not generated and/or delivered to the Buyer at the Delivery Point;

"Deemed Generated Energy Payments" has the meaning given in Clause 6.16;

“Default Rate:” Two percentage points above LIBOR;

“Delivery Point:” The point of common coupling as shown in Appendix C at which the Net Electrical

Output from the Plant is delivered to the Buyer;

“Emergency:” A condition or situation that in the reasonable opinion of either Party does materially or

adversely, or is likely materially or adversely to –

a. Affect the ability of either Party to maintain a safe, adequate or continuous supply of

electrical energy to its customers; or

b. Does or is likely to present a physical threat to persons or property or security integrity

or reliability of the Buyer’s System or the Plant;

“Effective Date:” Has the meaning subscribed to it in Clause 3.1;

"Environmental Attributes": Any and all Carbon Credits and any and all fuel, emissions, air quality or

other environmental characteristics, credits, benefits, reductions, offsets and allowances arising out

of any international, national or other laws or regulations (and whether now existing or enacted in the

future), including any such laws or regulations relating to oxides of nitrogen, sulphur or carbon,

particulate matter, soot or mercury, resulting from the generation of energy or the avoidance of the

emission of any gas, chemical or other substance to the air, soil or water attributable to such

generation;

Standardised PPA for large renewable energy generators (greater than 10 MW)

“Feed – In – Tariffs Policy:” The Feed – In – Tariffs Policy on Wind, Biomass, hydro, Geothermal,

Biogas and Solar Resource Generated Electricity first issued by the Ministry of Energy on March

2008 and subsequently revised;

“First Commissioning Date:” Has the meaning subscribed to it in Clause 5.6;

“Force Majeure:”Has the meaning ascribed to it in Clause 10;

“Full Commercial Operation Date:”The date notified by the Seller in accordance with Clause 5.7;

“Generating Licence:” Has the meaning ascribed to it in the Energy Act, (or any similar licence or

other authorisation pursuant to legislation replacing the Energy Act;

“Interconnection Facilities:” The point where the Seller’s Net Electrical Output line or electric system

feeds into the Buyer’s electric system and facilities required to connect the plant to the buyers

system;

“Interconnection Point”: the point at which the interconnection equipment and protection equipment

is located as shown in Appendix C.

“the Buyer’s System:” The transmission system operated by the Buyer and the distribution systems,

and ancillary plant and equipment connected to such transmission system;

“kW:” Kilowatt;

“kWh:” Kilowatt hour being three million six hundred thousand (3,600,000) Joules as defined in ISO

100.1992(E);

“Lenders:” The financial institutions specified in Appendix E, which term includes their successors

and assigns;

“LIBOR:” Means in respect of any day –

a. The rate per annum equal to the arithmetic mean (rounded upwards, if necessary, to

the nearest whole multiple of one sixteenth of one percent (1/16%) of the offered

rates per annum for deposits of a principal sum equivalent to the sum in question in

US Dollars for a period commencing on such day and ending seven (7) days later

which appear on the Dow Jones Markets Screen at or about eleven o’clock in the

morning (11.00a.m) London time two (2) business days prior to such day, provided

always that at least two offered rates appear on the Dow Jones Markets Screen

Page; or

b. If at least two (2) offered rates do not appear on the Dow Jones Markets Screen

Page as contemplated by the proviso to paragraph (a) of this definition, the rate per

annum,( rounded upwards if necessary, to the nearest whole multiple of one

sixteenth of one percent (1/16%) per annum of the interest rate per annum offered at

approximately eleven o’clock in the morning (11.00a.m) London time by at least

three (3) reference banks (selected by the Party entitled to receive the payment

due)two (2) business days prior to such day and for delivery on such day, to major

banks in the London Interbank Market for deposits in US Dollars in the amount of the

sum in question;

Standardised PPA for large renewable energy generators (greater than 10 MW)

“Long Stop Full Commercial Operation Date”: the date falling within twenty four (24) months after the

Effective Date or any extension thereof falling within thirty six months (36) after the Effective Date

agreed between the Parties;

“Material”.

“Mwh:” Megawatt hour being one thousand (1000)kWh;

“Must Take Facility”: A facility where the Buyer must take and purchase the Net Electrical Output, not

exceeding the annual dependable output, equivalent to 75% of net electrical output, to be generated

at the Plant and delivered and sold to the Buyer, subject only to such necessary directions or

protocols as may be issued by the Buyer for protection of its electric system.

“Net Electrical Output:” Energy from the Plant measured in kilowatt hours (kWh) which is generated

at the Plant and delivered to the Buyer at the Delivery Point;

“Non – Default Rate:” LIBOR;

“Parties:” the Buyer and the Seller;

“Plant:” All the Seller’s electrical prime movers and generators, together with all protective and other

associated or auxiliary equipment of the Seller, and rights to own or use land associated with the

electrical prime movers and generators, necessary to produce the Net Electrical Output pursuant to

this Agreement;

“Prudent Operating Practice:” In relation to either Party, standards of practice obtained by exercising

that degree of skill, diligence, prudence and foresight which could reasonably be expected from a

skilled and experienced person engaged in the same type of undertaking;

“Scheduled Outage:” An outage at the Plant which is scheduled in advance for the purpose of

performing maintenance of the Plant;

"Signature Date": The date of this Agreement;

“Large FIT Power Project:” A project of any capacity that generates electric energy from renewable

energy sources and sells pursuant to this Agreement over ten (10) MW of such output;

“Target Effective Date:” ………….. (Insert actual date);

“Term:” The period from the Effective Date until the expiry of this Agreement in accordance with

Clause 2 or earlier termination;

“Tariff:” The charge rate per kilowatt hour (kWh) defined in the FiTs tariff policy and specified in

Appendix B: (1);

“The Energy Regulatory Commission:” The Energy Regulatory Commission established under

section 4 of the Energy Act; and

“The Energy Act:”The Energy Act, No.12 of 2006, of the Laws of Kenya.

2 Interpretation

Standardised PPA for large renewable energy generators (greater than 10 MW)

In this Agreement, unless the context otherwise requires –

1 Reference to a business day is reference to any day which is not a Saturday,

Sunday or recognised public holiday in the Republic of Kenya;

2 Reference to a day, week or month is reference to a calendar day, week or

month;

3 Reference to Clauses, Appendices or paragraphs or figures are reference to

clauses, paragraphs and figures of and to this Agreement;

4 Words in the singular shall be interpreted as referring to the plural and vice

versa, and words denoting persons shall be interpreted as referring to natural

and legal persons;

5 The term including shall be construed without any limitation;

6 A requirement that payment be made on a day which is not a business day shall

be construed as a requirement that the payment be made on the next business

day;

7 Headings are for convenience only and shall not affect the construction of this

Agreement; and

8 Unless otherwise provided herein, where a consent or approval is required by

one Party from the other Party, such consent or approval shall not be

unreasonably withheld or delayed.

2. EFFECTIVENESS AND TERM

1. Effectiveness

The Parties’ obligations shall commence from full commercial effective date and shall unless

earlier terminated in accordance with its term continue in full force and effect for a period of

twenty (20) years.

2. Extension of Term

The term may be extended subject to agreement in writing by the Parties to such extension at least

twelve (12) months prior to its expiry and on such terms as the Parties may agree, and prior consent

from the Energy Regulatory Commission.

3. Scope

In accordance with and subject to the terms and conditions this Agreement:

1. The Seller will finance, design, procure, construct, install, test, commission, operate and

maintain the Plant in accordance with Prudent Operating Practice, supply and install the Main

Metering Equipment and the Back-Up Metering Equipment, supply and install Buyer’s

Connection Facilities, transfer to the Buyer the Buyer Connection Facilities and the Back Up

Metering Equipment and sell the Net Electrical Output to the Buyer; and

2. The Buyer will take delivery of Net Electrical Output and pay Energy Charges for such Net

Electrical Output.

3. CONDITIONS PRECEDENT

1. Conditions

Standardised PPA for large renewable energy generators (greater than 10 MW)

Except for the Parties’ respective obligations in Clauses 3.2, 3.3 and 3.4 or as otherwise

provided herein, the Parties’ obligations hereunder shall commence on the date (“the Effective

Date”) on which the last of the following conditions shall have been satisfied –

1 This Agreement is approved by the Energy Regulatory Commission.

2 The Generating Licence in respect of the Plant is issued to the Seller; and

1 The Seller’s Conditions

The Seller shall use all reasonable endeavours to facilitate the satisfaction of the conditions in

Clause 3.1 prior to the Target Effective Date or such other date as the Parties may agree in

writing.

2 The Buyer’s Conditions

The Buyer shall use all reasonable endeavours to facilitate satisfaction of the conditions in

Clause 3.1 on or prior to the Target Effective Date or such other date as the Parties may agree

in writing.

3 Progress Review

The Parties shall jointly review progress made towards achieving satisfaction of the Conditions

Precedent on a monthly basis and shall notify each other promptly of any anticipated delay in

the Effective Date occurring beyond the Target Effective Date.

4 Non- Satisfaction of Condition Precedent

If any of the Conditions Precedent shall not have been satisfied within six (6) months from the

Target Effective Date or such later date as the Parties may agree in writing, then this

Agreement shall terminate at such date, in which event this agreement shall be deemed null

and void ab initio and neither Party shall have any liability whatsoever to the other Party under

this Agreement.

3 INTERCONNECTION WITH THE BUYER

1 Interconnection Facilities

The Seller shall make all arrangements at its own expense necessary to transmit and deliver

the Net Electrical Output to the Buyer at the Delivery Point: the Buyer shall cooperate with the

Seller in these arrangements.

2 The Seller’s Responsibility

The Seller shall at the Seller’s own cost design, purchase, construct, operate and maintain the

Interconnection Facilities prior to commissioning; the Seller shall pay for the upgrading of

equipment in the buyer system necessary to enable the delivery of the net electrical output

into the buyers system. The design of the Interconnection Facilities shall be compliant with the

Buyer’s equipment, transmission and distribution requirements and standards, including

interconnection guidelines.

1 Upon completion and commissioning of Interconnection Facilities, the Seller shall

transfer to the Buyer, and the Buyer shall accept, own and maintain the interconnection

facilities, as beneficial owner all rights title and interest therein free of any

encumbrances together with all the applicable warranties and guarantees in respect

thereof and the Seller shall not be liable to the Buyer in respect of the Interconnection

Facilities from the date of such transfer, provided that –

2 The cost of undertaking the design, purchase, construction, installation, testing and

commissioning of Interconnection Facilities is deemed included in the Tariff;

Standardised PPA for large renewable energy generators (greater than 10 MW)

3 The Seller shall at all times, prior to the transfer to the Buyer of the Interconnection

Facilities in accordance with Clause 4.2, retain responsibility for ensuring the

Interconnection Facilities meet the Buyer’s specifications.

3 The Buyer’s Responsibility

The Buyer shall provide to the Seller the details for the Interconnection Facilities to enable

design, purchase, construction and commissioning of the Interconnection Facilities.

4 Connection to the Buyer’s System

The Seller shall liaise with the Buyer for the connection of the Plant to the Buyer System at the

Delivery Point.

5 Information

The Seller shall keep the Buyer informed of the progress of the design, financing, supply,

construction and installation of the Interconnection Facilities and equipment to be installed by

it pursuant to Clauses 4.1 and 4.2, and every month shall provide a progress report in respect

thereof.

6 Monitor Progress

The Seller shall-

1 Ensure that the Buyer and any representatives appointed by the Buyer, are afforded

reasonable access to the Site upon giving the Seller reasonable notice provided that

such access does not materially interfere with the construction works or expose any

person on the Site to any danger;

2 Make available for inspection at the Site copies of all plans and designs, other than any

proprietary information of the Seller or any sub contractor, in relation to the

construction, or any part thereof; and

3 Within three (3) months of the Plant commissioning date, supply the Buyer with one(1)

set of reproducible copies and two(2) sets of white print copies or equivalent of all “as

built” plans and designs relating to the operation or maintenance of the Interconnection

Facilities as the Buyer may reasonably require. The Seller shall also provide to the

Buyer two (2) copies of the operation and maintenance manuals in respect of the

Interconnection Facilities.

7 Disclaimer

The Seller

1 Accepts that any information provided by the Seller under Clause 4.5 or any

engineering review or inspection conducted by the Buyer under Clause 4.6 is solely for

the Buyer’s own information and accordingly, the Buyer’s review or failure to review or

carry out any inspection under Clause 4.6.2 shall not be construed as constituting any

approval or acceptance of Interconnection Facilities or the Plant, and the Buyer makes

no representation as to the engineering soundness of the Interconnection Facilities or

the Plant nor shall it be treated as having accepted Interconnection Facilities or the

Plant as fit to meet the terms of this Agreement.

2 Shall in no way represent to any third party that the buyer is responsible for the

engineering soundness of the plant as a result of any review or inspection done by the

buyer.

3 Shall, subject to the other provisions of this Agreement, be solely responsible for the

economic and financial feasibility, operational capacity and reliability of the Plant.

Standardised PPA for large renewable energy generators (greater than 10 MW)

4 COMMISSIONING AND TESTING

1 The Seller’s Obligations

The Seller shall carry out commissioning in accordance with Prudent Operating Practice and

any procedure agreed on by the Parties.

2 Notifications

The Seller shall give at least seven (7) day’s prior notice to the Buyer of the date

commencement of commissioning and testing of the first unit.

3 The Buyer’s Attendance

The Buyer shall, in respect of the Interconnection Facilities, have the right to be present at the

Site on each occasion, on which the test is being conducted, and to inspect and witness the

test, and to receive, within fifteen (15) days after the test, a written copy of the test reports.

4 Appointment of Independent Engineer

The Seller shall not less than fourteen(14) days prior to the commencement of the

commissioning, appoint an independent suitably qualified professional engineer or firm

acceptable to the Buyer(“ the Independent Engineer”) who shall among other things witness

the commissioning and Testing of the Interconnection Facilities. All fees and costs payable to

the Independent Engineer (including those incurred in making such appointment) shall be

borne by the Seller.

5 The Interconnection Facilities

The Seller shall test and commission the Interconnection Facilities in accordance with the

Commissioning and Testing procedures set out in Appendix C and further procedures agreed

or determined pursuant to Clause 5.1 and in accordance with Prudent Operating Practice not

later than one (1) month before the First Commissioning Date. The Seller shall before the First

Commissioning Date ensure that the Interconnection Facilities are available for operation.

6 First Commissioning Date

The First Commissioning Date shall be the date notified to the Buyer as the target date for the

start of commissioning of the first unit.

7 Plant Commercial Operation Tests

Upon satisfactory completion of the Plant Commercial Operations Test, the Seller shall

procure the issue of a certificate of the Independent Engineer certifying, without any material

qualification, that the Plant’s Commissioning has been completed and that the Plant is

available for commercial operation. The Seller shall, upon issue of the certificate, give notice

to the Buyer of a date (“the Full Commercial Operation Date”) being a date not later than

twenty one (21) days after completion of commissioning.

8 Synchronization

1 The Seller shall ensure that the Plant has adequate protection equipment prior to

synchronization with the Buyer System. The Seller and the Buyer shall inspect and

verify the protection equipment of the Plant together with the setting and operation of

the protection relay equipment of the Plant and switchgear prior to synchronization and

commencement of delivery of the Net Electrical Output by the Seller to the Buyer.

Standardised PPA for large renewable energy generators (greater than 10 MW)

Neither Party shall be liable to the other for any damage which may be caused to their

Plant or equipment during such synchronization.

2 The Seller shall notify the Buyer in writing at least thirty (30) days prior to synchronizing

or operating the Plant for the first time in parallel with the Buyer’s system, and

coordinate such commencement of operation with the Buyer at this first time and in

future times that the Seller resynchronizes or begins again to operate after a cessation

of operation in parallel with the Buyer’s grid.

9 The Buyer’s Cooperation

The Buyer shall, subject to any constraints on the Buyer System, cooperate with the Seller so

as to enable the Seller to commission the Plant in accordance with this Clause 5 and in

particular will authorize connection to the Buyer System and dispatch the Plant to the extent

reasonably required by the Seller for such purpose.

10 Interconnection Liability

The Seller shall accept all liability and release the Buyer from and indemnify the Buyer against

any liability for faults or damage to the Seller’s Interconnection Facility, the Buyer’s electric

system and the public as a result of any usage of the Seller’s Interconnection Facility which is

in any manner inconsistent with Prudent Operating Practice.

11 Commissioning and Testing Output

The Buyer shall pay energy charges to the Seller for all Net Electrical Output supplied from the

Plant during Testing and Commissioning at the rate of the feed-in tariff as specified in

Appendix B(1).

12 The Buyer’s Right To Terminate

If the Full Commercial Operating Date is not achieved by the Long Stop Full Commercial

Operation Date, other than in the circumstances described in Clause 11.1.1 of this Agreement,

the Buyer shall be entitled to terminate the Agreement.

5 DELIVERY, SALE AND PURCHASE OF ELECTRICITY

1 Delivery of Net Electrical Output

From the full commercial operation date and thereafter, the Seller agrees to deliver and sell to

the Buyer the Net Electrical Output for the term of this Agreement specified in Clause 2 and at

the price specified in Clause 6.15.

2 Acceptance and Purchase of Net Electrical Output

From the full commercial operation date and thereafter, the Buyer agrees and covenants to

accept into its transmission system and to purchase for the term of this Agreement as

specified in Clause 2 and at the price specified in Clause 6.15, the Net Electrical Output when

delivered by the Seller. The Buyer shall pay for the Net Electrical Output as ascertained and

determined by the metering equipment in accordance with Clause 7.5.

3 Environmental Attributes

Any environmental attributes recognized under any international, national or other laws or

regulations, associated with the ownership or generation of power from the Plant, including but

not limited to carbon credits or attributes created pursuant to the Kyoto Protocol or any