Power purchase agreement (PPA)

A long-term contract to buy electricity at an agreed price. Data center developers use PPAs to underwrite new generation and to hedge power-price risk, and the agreement is usually the instrument that makes a compute project financeable in the first place.

PPAs come in shapes that matter to lenders: physical or financial, fixed or indexed, and increasingly with hourly matching rather than annual volume. Which shape a project can support often decides whether it gets built.