The electricity generated by large solar power plants – in the MW range and connected to the medium-voltage transmission network – is usually sold directly to an electric power utility via a power purchase agreement (PPA). This is a legal contract defining pricing and conditions of sale, often including the agreement to purchase all the power produced by the solar power plant. The selling party usually needs to be registered as an independent power producer (IPP), a status which may require a range of technical, legal and financial criteria to be fulfilled, depending on the country and local regulations.
Tendering schemes for power purchase agreements are common. In tendering schemes, solar power producers place bids (usually for a particular project). The bidder offering the lowest PV electricity price, and who also meets other defined criteria, is awarded a long-term power purchase agreement. Conditions will vary from country to country.