Energy and Power PPPs

Energy is a broad sector that holds two important yet very different industries: the oil and gas sector and the power sector. The focus of the Public-Private Partnership Resource Center is on public-private partnerships (“PPPs”) that take place in the power sector.

Ready access to reliable electricity supply is critical both to sustained economic growth and social welfare. However, power sector projects, particularly the development of power generation and transmission infrastructure is very capital intensive. This is particularly so in many developing economies where demand for electricity is rapidly growing due to population and economic growth and the potential infrastructure gap to meet this demand is large. PPPs provide a useful tool which, if properly implemented, can provide governments with access to private sector capital, technology and expertise.

As there are a wide variety of power projects, so PPPs in the power sector also come in different shapes, sizes and structures. There is no one size fits all model. The appropriate methodology and structure for a PPP (or a broader PPP program) will need to be adapted to the particular circumstances of a country or region or, in some cases, of a specific project. Relevant considerations include:

  • the locale of the project(s), including associated local community and environmental considerations;

  • the specifics of the operation, including the technology used for the project (e.g. will the power plant be a conventional gas fired turbine or some cutting edge technology in renewable power generation);

  • the regulatory and broader social economic environment;

  • the objectives of the parties (e.g. is the government’s primary rationale for using a PPP model to access private capital, new technology or something else);

  • investor appetite and risk perception; and

  • access to capital markets.

The requirements for a PPP in a specific jurisdiction may also change over time, as its power sector matures. In economies with state operated power sectors, PPPs provide an important means of financing generation projects to meet basic demand. In economies with more deregulated power sectors and mature electricity markets, generation projects are often privately financed (and underwritten by market revenue). In these cases, PPPs may be more relevant to systemic projects which cannot as readily be funded through private finance alone. This section deals with power sector PPP projects and power sector reform, legislation and regulation, and independent power projects (“IPPs”) across a range of different jurisdictions, highlighting the varying roles played by PPPs in the power sector of economies at different stages of development. Navigate the following subsections for more information and sample laws, licenses and agreements.

See also:

Partner Resources

Renewable Energy Project Resource Centre (REPRC)

hosted by Energypedia

Wiki-based library of energy project resources. Includes sample terms of references, procurement documents, economic analyses and case studies (success factors and lessons learned).

Subsections

Energy Laws and Regulations Find documents and links to Energy/ Power sector reform, laws and regulation in this section of the PPPLRC.
Energy Licenses and Licensing Procedures The terms and conditions of licenses will vary depending on whether it is a license for generation, transmission,… more
Energy Agreements
A public-private partnership for an energy project requires a number of agreements to set out the relationships… more
Power Purchase Agreements (PPAs) and Energy… A Power Purchase Agreement (PPA) secures the payment stream for a Build-Own Transfer (BOT) or concession project for an… more
Implementation Agreements for Power PPPs Implementation agreements provide for direct contractual obligations and undertakings between the Government and the… more
Connection to Grid / Power Pooling Arrangements
Public private partnerships in power require also an Interconnection, Grid Connection of Power Pooling Agreement. This… more
Fuel Supply/Bulk Supply Agreement
Some issues that will need to be considered in a fuel supply agreement are: Quality of the fuel - what happens if… more
Land Lease Agreements
Land Lease Agreements are used whenever the government owns the land of the site of a project and leases it to the… more
Rural Electrification Funds: Sample Operational… To generate solutions for rural electrification in Africa, an innovative program, the Africa Electrification Initiative… more
Climate-Smart PPPs To deliver climate-smart infrastructure solutions, private investment and expertise is essential, including sustainable… more
Theft / Non-Technical Losses (Water and… Perhaps one of the greatest challenges in successfully operating a PPP related to utility services is to effectively… more
Gender & Energy Projects
Integrating Gender Across the PPP Project Cycle Multinational Development Banks (MDBs) as well as bilateral and… more
Energy & Power PPP Toolkits In this section, you'll find links to toolkits for evaluating and setting up public-private partnerships for power… more
Further Reading on Energy and Power PPPs
Reading and Resources: Understanding Power Project Procurement; Commercial Law Development Program (CLP) in… more
Concessions Build-Operate-Transfer (BOT) and… Concessions, Build-Operate-Transfer (BOT) Projects, and Design-Build-Operate (DBO) Projects are types of public-private… more
Management/Operation and Maintenance Contracts Management contracts and Operation and Maintenance (O&M) contracts are contracts governing a type of public-private… more
Contract Plans / Performance Contracts Whatever model of reform that is chosen for reforming public utilities, it has been found that these reforms can be… more
PPP Risk Allocation Tool (2019)
The PPP Risk Allocation Tool 2019 Edition is the second edition of the guidance tool, with the first edition focused… more

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