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.
- Identify potential locations for roof or ground mounted panels; considering current energy costs and spending.
- Issue a competitive RFP to select a developer/power supplier.
- Enter into a PPA with developer/power supplier.
- Obtain necessary permits and rebate agreements.
- Work with the developer/power supplier on project design and construction.