THE PPA MODEL

The Solar Power Purchase Agreement (SPPA) is an alternative to financing and owning the system. It offers you an opportunity to install solar power at your facility without paying upfront costs or worrying about system operation and maintenance.
Sometimes referred to as a “third party” ownership model, this approach lets you focus on your core mission, while solar experts manage your energy system.
For 10 to 20 years, you enjoy predictable, pre-set electricity prices, and power from a solar system that is a source of pride for your organization.
Power purchase agreements are a well-established contract mechanism. Many large businesses, such as Kohl’s, JCPenny and WalMart department stores, and institutions, such as airports and water districts, use these agreements for buying solar electricity.
The PPA model has increasingly become the established standard for commercial owners to pay for on-site green power with a yearly growth of over 30%.

The SPPA structure

Your organization contracts with a solar services provider that is responsible for financing, designing, installing, monitoring, and maintaining your project. You do not pay for the installation, but instead buy the electricity the system generates. You make your payments to the solar services provider for the electricity the solar system produces, just as you now pay your utility for electricity from large central power plants.

You determine the level of payment in advance, so you know what your power costs will be over the life of the SPPA contract, usually 10 to 20 years. In this way, SPPAs offer very different terms than utilities.
With the permission of regulators, your utility increases your electricity rates at any time. Many believe that electricity rates will rise significantly as climate change legislation is adopted because most electricity in the U.S. is produced from carbon-intensive fuels, such as coal and natural gas. So it is difficult to predict your future energy costs when you buy power from a utility. SPPA contracts avoid unexpected price fluctuations because the cost of the fuel is known: sunshine is always free.