PPA (Power Purchase Agreement)

A PPA (Power Purchase Agreement) is a contract in which a generator and a buyer set the terms for selling electricity in advance. Korean law does not use the word 'PPA'; it uses the terms 'renewable electricity supply business' and 'direct power trading'.

Under the Electric Utility Act, a registered renewable electricity supplier can supply renewable electricity to users without going through the power market, and prices and terms are negotiated and contracted individually. This is the direct PPA. By contrast, third-party power trading (third-party PPA) has the generator supply electricity to KEPCO, which then supplies it to the user.

News-reading tip: when a story reports a 'PPA signing', first check whether it is a direct PPA or a third-party PPA. Electricity supplied through direct power trading is not eligible for RECs, so the generator's revenue structure also differs.