Glossary

Power Purchase Agreement (PPA)

A long-term contract between a power producer (seller) and an offtaker (buyer, usually a utility) that sets the price, quantity, and terms under which electricity is supplied.

Independent Power Producer (IPP)

A privately owned company that builds and operates a power generation facility, selling the electricity it produces under a PPA rather than as a government-owned utility.

Offtaker

The buyer of the electricity under a PPA — in Ghana, usually the Electricity Company of Ghana (ECG).

Financial close

The point at which a project's financing is fully arranged and the funds become available for construction to begin.

Take-or-pay

A clause requiring the offtaker to pay for a committed quantity of electricity whether or not it is actually dispatched — a common source of fiscal risk.

Capacity charge

The portion of a tariff paid for a plant being available to generate, independent of how much electricity is actually delivered.

Energy charge

The portion of a tariff paid for electricity actually delivered, usually priced per kWh.

Indexation

A formula that adjusts a tariff over time in response to changes in inflation, fuel prices, or exchange rates.

Change-in-law protection

A clause that compensates a party for added costs caused by a change in law or regulation after the contract was signed.

Government guarantee

A sovereign commitment backing the offtaker's payment obligations, intended to make a project more financeable but creating a contingent liability for the state.

Termination compensation

An amount payable to one party if the PPA ends before its scheduled term, calculated under a formula set out in the contract.