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In this lesson on project finance modeling for renewable energy, we focus on Power Purchase Agreements (PPAs). A PPA is a long-term contract between an energy seller, typically an independent power producer, and an off-taker, which can be a private or public utility. Key aspects of PPAs include the fixed energy price per megawatt hour, price escalation formulas, energy volume, contract duration, and delivery points. The terms differ for wind and solar PPAs; for wind projects, the off-taker must purchase all produced energy, regardless of their immediate need. This ensures the seller receives payment for the total energy generated.