Anatomy of a data center PPA.

A data center power purchase agreement is the contract that turns a generating plant into a bankable power supply. Its essential terms fit on a page: how much capacity, how firmly guaranteed, for how long, at what price structure, and with what consequences when either side falls short. Everything else in the document exists to make those answers enforceable.

Capacity and availability

The contract states the capacity dedicated to the buyer and the availability level the seller guarantees — a measurable percentage, tested over defined periods. The definitions carry as much weight as the number: what counts as unavailability, which events are excused, how the measurement handles partial output. A generous-sounding guarantee with loose definitions is worth less than a modest one with tight ones.

Term, price, and symmetry

Terms run long — often a decade or more — because the plant is financed against the contract; a shorter commitment means someone must price the uncontracted years, and that someone's cost lands in the rate. Pricing may be fixed, indexed to fuel, or a hybrid. The structural heart is symmetry: the buyer commits to pay for the capacity whether or not it takes every megawatt-hour, and the seller commits to have that capacity available, each obligation collateralizing the other.

Remedies and credit support

Remedies give the guarantees teeth: liquidated damages scaled to the shortfall, escalation for persistent failure, and termination rights when performance collapses. Credit support runs both directions — the seller finances against the buyer's covenant, so buyer credit matters; the buyer bets its campus on the seller's performance, so parent guarantees, reserves, or security instruments back the seller's obligations too.

Expansion rights and the end of the term

AI campuses grow, so a well-drafted PPA addresses the next phase now: options or rights of first offer on additional capacity under an agreed framework, before that negotiation happens from weaker footing. End-of-term deserves the same forethought — renewal mechanics, repricing, and what becomes of the plant. A contract is also only as strong as the counterparty behind it; the diligence side of that question is covered in how to evaluate a BTM power provider, and the economics the contract is pricing are in the cost math.

About Corley Energy

Corley Energy is a behind-the-meter independent power producer, founded in 2024 by Jake Corley, Tim Bozeman, and Mark Meyer. We convert stranded Permian Basin natural gas into firm, contracted electricity for AI data centers at Power Foundry, our ~1,000-acre development in Upton County, Texas. Start with what a power foundry is, see the company facts, or check current capacity on the Sites page.

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