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Raser & SCPPA Reach 110-MW Pre-Paid PPA Deal
June 30, 2009
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Utah, United States [RenewableEnergyWorld.com] Raser Technologies Inc. has entered into a term sheet with the Southern California Public Power Authority (SCPPA) to sell 110 megawatts (MW) of geothermal power SCPPA member municipalities in a pre-paid arrangement. The power plants would be built at Raser's Thermo, Utah site, over a three year period.
Pre-paid PPAs are structured to take advantage of the municipalities' ability to borrow at favorable rates to purchase power up front at a reduced rate.
The term sheet establishes the basic terms of a Power Purchase Agreement (PPA), under which Raser would develop 110 MW of geothermal power for sale to SCPPA in a pre-paid arrangement. The term sheet is non-binding, and either party can end discussions at any time, for any reason, without liability to the other party. Under a pre-paid PPA, the purchaser of the power pays for a portion of the expected power generation up front and then pays a reduced monthly amount for the remaining power and environmental attributes. Pre-paid PPAs are structured to take advantage of the municipalities’ ability to borrow at favorable rates to purchase power up front at a reduced rate. This allows the municipalities to improve the economics of the transaction and provide greater price stability over the life of the agreement, as well as provide greater access to renewable energy projects.
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