A power purchase agreement (PPA) is a contract between a power producer and a buyer, often a utility or large energy consumer. This agreement outlines the terms for the sale of electricity generated by a specific energy project, such as a solar farm or wind turbine. The buyer agrees to purchase a set amount of electricity at a predetermined price over a specified period, usually ranging from 10 to 25 years. PPAs help facilitate the financing of renewable energy projects by providing a stable revenue stream for developers. They also enable buyers to secure long-term energy prices, which can protect them from market fluctuations. Overall, PPAs play a crucial role in promoting the growth of renewable energy sources.