PPA PAYMENT STRUCTURES: TAKE-OR-PAY APPROACH VS TAKE-AND-PAY APPROACH (A POLICY BRIEF)
The payment structure that a country chooses when signing PPAs set the tone for allocating revenue and market risk of the project between the government and the IPP. It is of utmost important that governments review the options available, while weighing their advantages and disadvantages to make a decision. Depending on the provisions in the PPA, later revisions to the payment structure may be impossible or attract some controversies.
This policy brief highlights the different policy options available and could be adopted with regards to the different payment structures for IPP projects. This paper has been developed on the back of some countries like Ghana and Kenya having reviewed some previously signed PPAs and converting them into models/structures that are less costly.
This policy brief was produced by Ms. Ivie Ehanmo, an energy regulatory specialist and a PhD candidate with the University of Dundee.