Independent power producer facts for kids

An independent power producer (IPP) is a company that makes electricity to sell. But it's not the main power company, like the one that sends electricity to your home. These companies can be private businesses, groups that work together (like for solar or wind power), or even factories that make extra electricity and sell it.

An independent water and power producer (IWPP) is similar to an IPP. The difference is that an IWPP also cleans water to make it usable, along with producing electricity.

How IPPs Work with Money

For many IPPs, especially those making renewable energy (like solar or wind), they have special agreements. These agreements, sometimes called "power purchase agreements," promise them a set price for their electricity for a long time. This helps them plan and build new power plants. IPPs have been very important in helping the world switch to more renewable energy sources. They own most of the renewable energy power plants working today.

IPPs in Germany

For many years, IPPs were not common in Germany. But they have become more popular since a law called the EEG was introduced. This law helps renewable energy projects. For IPPs to succeed in Germany, they need to find partners who can help deliver the electricity to customers.

IPPs in Canada

In Canada, each province has its own rules for electricity. So, how IPPs fit into the power system can be different from one province to another.

For example, in 2002, the government of British Columbia decided that new clean, renewable energy would be made by IPPs. This meant that the main power company, BC Hydro, would not build these new clean energy projects (except for very large hydro dams). Today, IPPs produce a lot of the electricity used in British Columbia.

IPPs in Taiwan

Taiwan's electricity market became more open to different companies in January 1995. Now, nine different IPP companies are working in Taiwan.

IPPs in the United States

Before 1978, it was rare for companies other than the main power utilities to make and sell electricity in the United States. The few that existed usually couldn't sell their power easily because it was too expensive to build the power lines needed. The main power companies owned everything: the power plants, the big transmission lines, and the local delivery systems.

However, in 1978, a law called the Public Utility Regulatory Policies Act (PURPA) changed things. This law created a new type of power producer called "Qualifying Facilities" (QFs). These QFs were allowed to make electricity and sell it.

PURPA was created to help the U.S. rely less on foreign energy. It also encouraged saving energy and made it fairer for smaller power producers to sell their electricity. A QF is a power plant that makes electricity and also uses the leftover heat for something useful. It has to meet certain rules about how it's owned, how it runs, and how efficient it is.

Now, under PURPA, the main power companies must buy electricity from QFs. They have to pay a fair price for it. This means that smaller power producers can get a good price for their energy, and the electricity they make won't be wasted.

IPPs in Pakistan

In 1994, the Government of Pakistan announced a plan to encourage IPPs that use oil, coal, and gas. After this plan, 16 IPPs were started. The next year, a plan for hydro power (electricity from water) was announced, which led to Pakistan's first hydro IPP.

In 2002, a new government introduced another plan, and 12 more IPPs began working. To help IPPs get started, there's a group called the Private Power and Infrastructure Board. This board helps IPPs with all the government steps needed to build their power projects.

In 2015, Pakistan adopted another power plan. This led to 13 more IPPs being built, mostly by companies from China. A plan was also announced to allow private companies to build transmission lines (the big power lines that carry electricity).

By 2018, more than 40 IPPs were operating in Pakistan.

IPPs in India

India also has many IPPs. Some well-known ones include ReNew Power, Adani, Onix Renewable, KPI Green Energy, Hero, Mytrah, Ostro, Greenko, Alfanar, Mahindra Susten, and Jakson Ltd.

IPPs in South Africa

The Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) is a program by the Government of South Africa to get more electricity from private companies. It focuses on renewable sources like solar power, wind power, small hydro power, and power from landfill gas, biomass, and biogas. As of 2021, this program had approved 117 projects, which together could produce over 8,800 megawatts of electricity from private companies.