Capacity Building on Design of Bankable Power Purchase Agreements in Caribbean Small Island Developing States (SIDS)

Power Purchase Agreements (PPAs) are long-term contracts between sellers and buyers of electricity, defining each parties’ rights and responsibilities, and defining mechanisms for dispute resolution. As these agreements lay out the contractual basis for risk allocation between the parties and represent risk hedging instruments for the seller, well-designed PPAs are key to ensure the bankability of generation projects and, therefore, to enable to enable their deployment.

Enhancing the capabilities of local regulators and utilities on the practical design of key clauses for risk allocation and pricing and enhancing their ability to negotiate these clauses is needed to enable the emergence and use of PPAs fit to drive the commitment of capital to renewable energy projects in the region. Local regulators and utilities can benefit from training on how risk allocation emerging from these contractual design choices, affect the remuneration required by project developers, the incentives they perceive to efficiently operating the plant, and the risks borne by the off taker.

The main objective of this capacity building programme is to address the needs of the SIDS related to PPA design, development and negotiations. For that, it encompasses a two-part capacity building event, including invitation-only round tables, to share with local authorities the concrete needs of project developers, investors and creditors; and a training event on the design of bankable PPAs for local regulators and utilities. The capacity building event is expected to contribute to the improvement of PPAs in the Caribbean region and enhance the capability of local utilities and regulators to design bankable contracts, with the final goal of contributing to effective commitment of private capital to the deployment of renewable energy projects in the Caribbean SIDS.

Meeting was by invitation only.