The AAE is considered binding at the time of signing, also known as the reference date. Once the project is built, the validity date ensures that the buyer buys the electricity produced and that the supplier does not sell its production to others other than the buyer. [9] Long-term sales contract. In this case, Offtaker undertakes to withdraw the agreed quantities of products from the project, but the price paid is based on market prices at the time of purchase or an agreed market index. The project company therefore does not take the risk of demand for the product of the project, but assumes the market risk on the price. This type of contract is often used, for example, in mining, oil and gas and petrochemical projects in which the project company wants to ensure that its product can be easily sold on international markets, but offtaker would not be willing to take the risk of commodity prices. At No. 6.3.2 – 6.3.6, the typical provisions are discussed in a take-or-paying or offtake contract. For example, an electricity purchase contract (AAE) is used because it is a common type of offtake contract in the context of project financing and other contracts generally follow the AAE model. AAEs have also served as a model for PFI pilot project agreements (see point 6.4). However, these clauses are not always commercially viable when considering the buyer`s position, since the buyer must pay for gas or electricity that he does not intend to use without the possibility of storing the additional electricity.

They also affect the consumer price of gas or electricity and the corresponding subsidies. A new form of PPP has recently been proposed to commercialize electric vehicle charging stations through a bilateral form of electricity purchase contract. However, the move to take-and-pay clauses will not be attractive to potential lenders and investors and could hinder the promotion of future energy and infrastructure projects. Process installation projects (see point 2.5.1) for which a product is sold, such as the aerating contract. B, are usually done on a take-or-pay basis. Kenya – Electricity Purchase Contract (AAE) – Simplified agreement for Kenya A relatively simplified electricity purchase agreement has been developed for Kenya`s electricity regulator for use in “Hydro, Geothermal or Gas” electricity generation facilities.