[3] In either case, the price can be a fixed amount per kilowatt-hour or fluctuate with market rates, depending on the specific terms of the contract.
This approach facilitates the financing of distributed generation assets such as photovoltaic, micro-turbines, reciprocating engines, and fuel cells.
In the case of distributed generation involving a commercial PPA variant, the buyer may be the occupant of the building—a business, school, or government for example.
A common approach is to sell the electricity directly where the generator connects to the grid (a so-called "busbar" sale).
Alternatively, the PPA can distinguish another delivery point agreed upon by both parties, in which case the seller is responsible for transmission.
[8] This system is intended to provide an incentive for the seller to properly estimate the amount of energy that will be produced in a given period of time.
In the United States, PPAs are typically subject to regulation by the Federal Energy Regulatory Commission (FERC).
[9] PPAs facilitate the financing of distributed generation assets such as photovoltaic, microturbines, reciprocating engines, and fuel cells.
However, in recent years, this type of financing has gained pace in the European Union, where it has been utilized to fund about 9 GW of output, headed by significant contracts in Spain and Scandinavia.
Data center owners Amazon, Google, and Microsoft have used PPAs to offset the emissions and power usage of cloud computing.
[5][19][20] Some manufacturers with heavy carbon emission footprints and energy usage such as Anheuser-Busch InBev have also shown interest in PPAs.
In 2017, Anheuser-Busch InBev agreed to purchase using a PPA from the utility company Iberdrola in Mexico for 220 MW of new wind power capacity.