Frequently Asked Questions
Who qualifies for a PPA?
Because PPAs are long-term agreements, it's best to see if your business or organization meets some basic criteria.
What businesses/organizations use PPAs?
Leading businesses including Google, FedEx, Siemens, Google, Walmart, and Kohl's, and institutions such as universities, school districts, municipalities, and the U.S. military. It is projected that 80% or more of non-residential solar installations going forward will utilize PPAs.
How much do PPAs cost?
Solar electricity is becoming competitive with the most expensive peak electric rates. Rebates and incentives created to encourage the use of solar power help bring costs down. PPA Partners will analyze your current electricity usage and cost. In most cases, we can provide solar energy at a price that will reduce the total cost of electric energy at your facility, often significantly, and lock in future rates. Net Metering also makes it possible for you to get credit for excess solar power generation enabling our customers to experience even greater savings.
Who is responsible for vandalism?
Although your system is owned by a third party, you maintain control of the property where the solar energy generation equipment is installed. Therefore, most PPA arrangements are similar to leasing agreements. PPA Partners asks our customers to provide space for the equipment and the same security measures you would typically employ for other buildings and equipment at your facility. We provide a comprehensive insurance program, maintenance and repair services, and provide security systems and cameras. We also offer advanced recognition programs that alert us prior to an event's occurrence, and fencing around the generation facility.
Who is responsible for liability in a PPA agreement?
PPA Partners is responsible for installing systems that are in compliance with all applicable laws and regulations, including building and electrical codes. Both PPA Partners and our customers are responsible for maintaining liability and property insurance to protect and indemnify against potential claims.
What savings are possible from using a PPA?
While potential savings depends on the type of PPA and its structure, the amount you'll save is based on the following variables:
- System engineering (solar type and location)
- Project costs
- Local electric costs
- Financial structure of the agreement
- Federal/state/utility incentive programs
Is an RFP the best way to obtain a solar PPA?
Request for Proposals, or RFPs, are sometimes used by organizations to solicit proposals for a PPA. But many organizations have found that RFPs didn't result in successful PPA agreements since winning bidders were not been able to deliver the promised systems. The RFP procurement process works best in the Design-Bid-Build construction model. Design-Bid-Build works best when a project is predefined (designed) then bid through an RFP. This method can be effective when the host wants to purchase a specific system, but it usually doesn't work for a PPA.
A cost-effective PPA requires the system to be precisely tuned to site-specific conditions, utility rates and electricity usage. That requires upfront analysis and engineering. Consequently, an RFP usually cannot produce proposals with adequate information to make a fully informed decision. In addition, solar PPA RFP's tend to attract larger vendors with minimal appetite for any type of risk. Since their proposed price of electricity may be at or higher than existing rates, it's a no win situation for the client.
What’s the difference between buying a solar system and a PPA?
There two primary ways to obtain solar energy: buying or leasing. The process is somewhat complicated and if an organization chooses to buy, will require a significant capital outlay. Organizations that choose to install solar equipment on their own will need to go through the following process: competitive solicitation, evaluation of system design & engineering, project finance/internal finance, site specific agreements, including:
- Equipment acquisition (Solar Panels, Inverters, Support structures, etc.)
- Government Incentive Application
- Utility & Environmental Permits Installation Services
- System Construction
Other than the complex process, what are the drawbacks of purchasing solar on my own?
If you opt to buy, you'll experience hefty upfront costs, need to maintain the likely unfamiliar electrical system, add trained staff, know how to select the best system, know how to properly configure the system for optimal performance, longevity and production risks. You'll also be responsible for guaranteeing the system performance, knowing how the system will interact with your physical property and know how to handle any problems that might occur along the way.
Why do PPAs include price escalation terms?
Solar equipment is not inexpensive. Solar electricity agreements typically include price escalation terms for four reasons:
- Customer demand: Customers want to save money from the outset. To accomplish this, electric rates are set low and allowed to escalate over the term of the agreement.
- Money market investor requirements: Investors have market rate opportunities, transactions need to be structured to provide a market attractive return.
- Rising administration costs: Administration and billing costs are rising and will continue to rise more as the system ages.
- Rising operations & maintenance costs: the equipment must be maintained and repaired if necessary to provide continuous onsite power. Like all costs related to labor, those costs are not static over a 10-30 year term.
Are electric prices certain to go up? Isn't it possible that electric prices might come down in the future?
No one has a crystal ball. Electricity prices are likely to continue rising for many reasons, including:
- Rising fuel costs: The long-term prognosis for energy prices is up. Even during the last 30 years when oil and natural gas prices were moderate most of the time, electric prices have risen domestically by approximately 5-7 % per year.
- Renewable source requirements: Proposed and existing legislation requires utilities to source from 10-30% of their power from renewable sources by 2020. Renewable energy and the systems to deliver it will cost more than existing delivery systems.
- Load growth: Substantial investment in systems and facilities is needed to reinforce existing infrastructure and accommodate load growth.
- Aging distribution infrastructure: Capital investment is required to replace aging distribution infrastructure and business systems.
- Rising operational expenses: System operation and maintenance costs are increasing.
- Staff turnover: Rising recruiting and training costs necessitated by an aging workforce nearing retirement.