PPA
What is a power purchase agreement?A power purchase agreement (PPA) is a long-term contract (typically 20-25 years) between an independent power producer (e.g. Photon) and its customer. Under the terms of a PPA, the customer agrees to purchase solar energy that is generated from a solar electric system the PPA provider installs on the customer’s facility. The independent power producer pays for the project, maintains and monitors the energy production, and sells the electricity to the customer at a contracted price for the term of the contract.
PPA Benefits
PPAs provide customers with numerous advantages over owning, installing, and maintaining their own solar electric facility including:
- Zero (‘0’) Upfront Cost – We pay for and install the solar PV system.
- No Maintenance – We provide all ongoing maintenance services.
- Simple - We process all rebates, tax credits and other incentives.
- Price Protection – We fix our customer’s power cost to provide a hedge against rising electric prices.
- Full Use of Tax-Based Incentives – Our capital sources are able to fully utilize federal and state tax incentives to bring our customers the best value.
- Lower Electricity Cost – Our electricity pricing is almost always less expensive than grid supplied power over the life of the agreement.
- No Production Risk – We bear the risk for lower power output that may be caused by less than ideal weather conditions.
Solartech has created an industry standard PPA template and made it available for download.