A power purchase agreement is a long-term contract under which a generator sells electricity to a buyer at a pre-negotiated price, often for 5 to 20 years. The contract sets the project's revenue, which helps it raise financing.
What the video says
In infrastructure, a wind farm can sell years of power before it spins. It's called a power purchase agreement. It's a long contract, often five to twenty years. Say a buyer agrees to pay fifty dollars a megawatt hour. Now the project has income it can show a lender. That helps pay for the build. So it gets built. Then the market price falls to thirty. The farm still gets fifty. Then the market jumps to eighty. The farm still gets fifty. So why do investors care? It swaps the highs for steady income. And that income is only as good as the buyer. Sell the power first. Then build the farm.
In the glossary: Power purchase agreement
A simple example with round numbers, not advice. Terms vary by fund.
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