IPP Model
What is an IPP model?
Independent power producers (IPPs) are non-utility generators (NUGs) that are typically not owned by the national electricity company or public utility. IPPs generate electricity for sale to the national electricity network.
Independent Power Producers (IPPs) or non-utility generator (NUG) are private entities (under unbundled market), which own and or operate facilities to generate electricity and then sell it to a utility, central government buyer and end users. IPPs may be privately-held facilities, cooperatives or non -energy industrial concerns capable of feeding excess energy into the system.
IPPs invest in generation technologies and recover their cost from the sale of the electricity. They can be great help to country’s energy sector (especially when the public sectore do not have the required financial capacity for investment).
There are different goals for integrating IPPs into the nationals, but USAID has summarized the following three goals:
Attract outside capital to meet rapidly growing electricity needs without imposing large strains on the nations internal financial capabilities.
Reduce electricity costs though competitive pressures.
Assign risks in a more efficient or desirable manner.
Key Points
Homeowner offers Premises
The consumer provided his unused space for no cost.
RESCO invests capital
RESCO undertakes to bear all capital expenses and risks.
Installation
RESCO setup solar plant in the customer premises.
Power purchase agreement
The customer and developer sign PPA contract.