Power Purchase Agreement (PPA)

Utility and commercial PPA projects are assumed to sell electricity through a power purchase agreement at a fixed price with optional annual escalation and time-of-delivery (TOD) factors. For these projects, SAM calculates:

  • Levelized cost of energy
  • PPA price (electricity sales price)
  • Internal rate of return
  • Net present value
  • Debt fraction or debt service coverage ratio

SAM can either calculate the internal rate of return based on a power price you specify, or calculate the power price based on the rate of return you specify.

Sample Spreadsheets

For links to Excel workbooks that replicate SAM's cash flow calculations, see the Financial Models page.

Financial Models for Utility-scale Projects Webinar

This webinar, presented in July 2023, is overview of SAM's PPA financial models (Single Owner, Partnership Flip, Sale Leaseback), Merchant Plant, and Community Solar models for utility-scale power generation projects with a live demonstration in SAM 2022.11.21 of inputs and results for these models.

Introducing SAM's PPA Financial Models

The following YouTube playlist is for a video presentation of the PPA financial models when they were first added to SAM in 2013 as "Advanced Utility IPP Options." These were available in addition to SAM's original "Utility Independent Power Producer (IPP)" financial model. In 2015, we renamed the "Advanced" models to "Power Purchase Agreement (PPA)," and removed the original IPP model because the PPA Single Owner model has a better representation of project debt and an option for an IRR target year different from the analysis period that was not available for the "IPP" model. The descriptions in these videos are stilll relevant, but the SAM user interface design, model names, and mention of the old IPP model have changed in versions of SAM newer than SAM 2015.1.30.