A power purchase agreement (known by its acronym in English, PPA, power purchase agreement), or an electric power contract, is a contract between two parties, one that generates the electricity (the seller) and another interested in purchasing the electricity (the buyer). The PPA defines all commercial terms for the sale of electricity between the two parties, including when the commercial operation will begin, the delivery schedule of electricity, penalties for underdelivery, payment terms, and termination.

A PPA is the main agreement that defines the revenue and credit quality of a generation project and is therefore a key instrument for project financing. There are many forms of PPAs in use today, which vary according to the needs of the buyer, the seller, and the financing counterparty entities.[1][2]​.