What You Should Know About Prepaid Power Contracts

Law360, New York (October 10, 2012, 2:17 PM EDT) -- Developers are taking another look at prepaid power contracts as a way of reducing the cost of capital for utility-scale renewable energy projects. The concept is simple and is not necessarily limited to use in the United States. The developer asks the utility that has signed a long-term contract to buy electricity from the project to pre­pay for a portion of the electricity in exchange for a discount on the electricity price.

Chances are the utility has a lower cost of capital than the project has....
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