Power Purchase Agreements

June 1, 2017 Green Infrastructure, News, Policy Brian Nowakowski

Municipalities are increasingly entering into Power Purchase Agreements (PPAs) to finance renewable energy projects to lower municipal energy costs and reduce carbon dioxide emissions.

A PPA is a contract between an independent power supplier (i.e. not a public utility) and a municipality to provide “behind-the-meter” electricity to public facilities at costs that are below utility rates.

In a solar PPA, the developer/power supplier designs, finances, builds, owns, operates, and maintains the solar electricity generating system. The municipality leases a site for the supplier to operate its system and enters into a long-term contract with the supplier to purchase the electricity.

There are several benefits to using this model:

  • Low upfront costs for municipality.
  • Long-term energy cost predictability.
  • Limited maintenance responsibilities.
Getting Started:
  1. Identify potential locations for roof or ground mounted panels; considering current energy costs and spending.
  2. Issue a competitive RFP to select a developer/power supplier.
  3. Enter into a PPA with developer/power supplier.
  4. Obtain necessary permits and rebate agreements.
  5. Work with the developer/power supplier on project design and construction.
The same principles can be applied to other sources of renewable energy, such as windmills and geothermal systems.

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