Energy project finance reference. This educational resource covers project investment and financing concepts. It is separate from Jaken Energy’s commercial electricity and natural gas procurement service; it is not a financing offer or a promise of funding.
Power purchase agreements: physical delivery and risk
A power purchase agreement defines the sale and purchase of project output. It must specify what is delivered, where, when and with which environmental attributes. A physical agreement and a financial settlement agreement have different consequences for the buyer’s utility account.
What to evaluate
Review quantity, delivery point, pricing, escalation, curtailment, imbalance, credit support and default provisions together. A fixed energy price leaves other risks, including output variability and excluded charges. Do not assume environmental claims are available unless the contract transfers the relevant renewable energy certificates.
Build a defensible comparison
For a property host, also review access, roof and land rights, insurance, maintenance, restoration, removal and sale or lease assignment. Match the agreement term to control of the property. The comparison should distinguish project power from the retail supply contract that may remain necessary for residual building load.
Documents and questions to prepare
- Physical or financial structure
- Energy volume, delivery point and settlement
- REC ownership and permitted environmental claims
- Credit support, transfer and termination
For commercial property owners
Start with the property’s actual accounts, lease responsibilities and plans for ownership or sale. Keep commodity procurement, building improvements and project investment as separate decisions. Include the costs you retain and the savings you retain after tenant reimbursement. An improvement that lowers a tenant-paid expense may benefit tenants without producing the same increase in owner income.
Prepare a base case and a downside case using dated evidence for costs, revenue and funding. Any financing rate, tax benefit or return is a project assumption until supported by current documents. Legal, tax, engineering and lender review should follow the actual transaction.
For the existing property’s supply-cost decision, use the contract-cost calculator or request a property energy review.
Primary sources
Reviewed October 12, 2026. Program rules, tariffs and financing terms should be checked again before a transaction.