A financial AAE can be used as a hedge against the volatility of electricity prices for the customer if the price of electricity sold by the financial PPP project in the wholesale electricity market is correlated with the price paid by the customer to purchase electricity for its own activities. If electricity prices are high in both markets, the customer is credited by the seller with a high interest rate and can offset the high costs he pays for electricity through his credit. Conversely, when electricity prices are low, the customer`s electricity costs are also low, but this is offset by the burden the customer owes to the seller. The net result of the purchase organization is a less volatile cost of electricity. A POWER Purchase Agreement is a legal contract between an electricity producer (supplier) and an electricity buyer (buyer, usually an electricity supplier or a large electricity buyer/distributor). Contractual terms can take between 5 and 20 years during which the buyer buys energy and sometimes also capacity and/or ancillary services from the electricity producer. These agreements play a key role in financing assets of own property producing electricity (i.e. not held by a utility company). The seller under the AAE is usually an independent electricity producer or a “PPI.” Tanzania – Relatively simplified electricity supply agreements for small-scale generators in Tanzania – standardized main grid connection maps and standard APPAs for insulated mini-grids, as well as standardized tariff methods for each case and detailed tariff calculations, all available on the EWURA website. See also guidelines for the development of small energy projects. The grid manager generally retains all environmental benefits when clean energy is injected into the grid, such as Renewable Energy Certificates (C.B).
UC is a negotiable, non-tangible energy raw material that is emitted when a megawatt-hour (MWh) of electricity is produced from a renewable energy source and delivered to the grid. These certificates are a way for companies to check the CO2 reductions of certain projects and to attribute them to organisational objectives for the use of renewable energy. Mandatory REC markets exist in countries with renewable energy portfolio standards (SRPs), but there are also voluntary REC markets for those who wish to purchase them. REC arbitrage, which is almost immediate for buying and selling and selling in different markets, may be an option to reduce the total cost if the customer is established in a high-priced market.