Determination of the PPA Rate

A PPA is one of the main factor that determines a power project’s ‘bankability’.

PPA rate = Cf + Ef

Cf = Capacity fee = fixed costs + debt service + sponsor reimbursement

Ef = Energy fee = fuel + variable O&M costs

Source:
FIGURE 3-9 Determination of the PPA Rate
Project Finance in Theory and Practice
Designing, Structuring, and Financing Private and Public Projects
by Stefano Gatti