What is a PPA?
A Power Purchase Agreement (PPA) is a long-term contract in which an entity agrees to purchase electricity directly from an energy generator service. Say you would like solar parking installed on your property with EV charging, but don't want the hassle associated with maintaining it. Your contract can be structured so that your business begins saving money on total power needs immediately after the build is operational and the ownership and maintenance responsibilities of the project is held by the generator. Even though many business opt to dig deeper to invest in PPA projects to avoid power outages or to minimize exposure to rising energy prices, a properly structured agreement can provide a stable, reduced energy budget for the business.
Who should have a PPA and who should own their own solar?
While small scale home solar is generally owned or leased (where available), businesses interested in keeping their budgets flat will generally opt for a PPA agreement while enjoying cost savings from day one.
How do Power Purchase Agreements work?
A developer installs, owns, and operates a solar system on the customer’s property.
The customer purchases the system’s electric output at a fixed rate. This is generally a lower rate than what they pay to their utility.
The PPA contract lasts for a fixed period, usually 15-25 years.
How do PPAs benefit customers?
PPAs allow schools, places of worship, and other nonprofits to benefit from solar with low to no upfront cost.
Customers can see electric bill savings from day one.
They lock in their energy rates. This stabilizes monthly budget expenditures and protects them from utility rate increases.
How can PPAs benefit the local community?
Local energy generation contributes to grid stability. On-site usage of power generation is far more efficient than transmission lines, so less power needs to be generated for use.
Lowers the cost of business due to energy savings.
Attracts employers to locate and invest in the community. Many major global corporations have made commitments to use renewable energy.
Creates good local jobs in the energy industry. Solar PV installer is the fastest growing occupation in the nation.
Power purchase agreements are widely in use in the U.S. and internationally. Although there is much hype about Virtual PPAs by large corporations, these are financial agreements rather than purchases of power. A Physical PPA and on-site power generation is the right choice in deregulated markets of Texas.