Independent Power Producer

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An independent power producer (IPP) or non-utility generator (NUG) is an entity,[1] which is not a public utility, but which owns facilities to generate electric power for sale to utilities and end users.[2] NUGs may be privately held facilities, corporations, cooperatives such as rural solar or wind energy producers, and non-energy industrial concerns capable of feeding excess energy into the system.[3]

Economic situation[edit]

For the majority of IPPs, particularly in the renewable energy industry, a feed-in Tariff or Power Purchase Agreement provides a long term price guarantee.


Has been uncommon in Germany for decades but since the EEG (for renewable energy) the business model gets more common. It depends on finding a partner for distributing the produced energy to the customer.


In 2002, the BC government stipulated that new clean renewable energy generation in the province[4] would be developed by "independent power producers" (IPPs) not BC Hydro, save for large hydro-electric facilities. The role of the private sector in developing BC’s "public" resources is one of the more controversial issues that British Columbians are currently grappling with.


The liberalization of Taiwan electricity market was done in January 1995. Currently there are nine IPP companies operating in Taiwan.[5]

United States[edit]

Prior to the US Public Utility Regulatory Policies Act (PURPA) of 1978, NUGs were rare, and the few that existed were seldom able to distribute power, as the cost of building the conveyance infrastructure was prohibitive. Public utilities generated power and owned the generating facilities, the transmission lines, and the local delivery systems. Congress Passed the PURPA in 1978, establishing a class of non‐utility generators, called Qualifying Facilities (QF), which were permitted to produce power for resale.

PURPA was intended to reduce domestic dependence on foreign energy, to encourage energy conservation, and to reduce the ability of electric utilities to abuse the purchase of power from QFs. A QF is defined as a generating facility that produces electricity and another form of useful thermal energy through the sequential use of energy, and meets certain ownership, operating, and efficiency criteria established by the Federal Energy Regulatory Commission (FERC).

Section 210 of PURPA now requires utilities to purchase energy from NUGs which qualify (qualifying facilities) at the utility's avoided cost. This allows NUGs to receive a reasonable to excellent price for the energy they produce and ensures that energy generated by small producers won't be wasted.[3]


Government of Pakistan announced an investor friendly policy in 1994 to develop IPPs based on OIL, Coal and Gas, which helped in establishment of 16 IPPS with a capacity of more than 3500 MW. Later on in 1995 a hydro power policy was announced which resulted in development of country's first Hydro IPP. After announcement of power generation policy 2002, another 12 IPPs started operations and added another 2,900 MW were added to the National Grid. The Country has announced a new power policy in 2015 whereby the capacity in power generation has been enhanced by another 11,000 MW and more than 13 IPPs have made substantial investments. The Government has also announced a transmission policy for development of transmission line in private sector. currently, more than 40 IPPs are operating in Pakistan.


India also has many IPP's like ReNew Power, Adani, Hero, Mytrah, Ostro, Greenko Etc.


  1. ^ Gas engines for IPPs,, accessed 11 November 2013
  2. ^ "Independent Power Producer (IPP) - Americas Generators". Retrieved 2012-02-08. 
  3. ^ a b "independent power producer (IPP), non-utility generator (NUG)". Retrieved 2012-02-08. 
  4. ^ [1][dead link]
  5. ^ "Archived copy". Archived from the original on 2013-10-29. Retrieved 2013-11-11.