PPAs are best for organizations that own their own buildings or homes. Or plan to occupy their space for an extended period of time. Also, a property owner who has a large open property or rooftop space (such as a warehouse or distribution center) may also enter into a PPA in connection with a rooftop or property lease as a means to generate not only renewable energy, but also revenue from energy sales to the local utility.
Solar Power Purchase Agreements (PPA)
Scott Wiater, President | Standard Solar
1) How does a solar PPA work and what are the advantages?
Power Purchase Agreements (PPAs) allow small and large businesses, government agencies as well as educational institutions to purchase solar energy from a private solar company. Through PPAs, solar developers like Standard Solar install and maintain ownership of a solar electric system while allowing the business to purchase the power generated by the system. This agreement allows the organization to enjoy the environmental and financial benefits of solar energy without the upfront capital investment or operational risk.
2) What is the difference between leasing and a PPA?
Leasing a solar electric system is another option to obtaining solar energy. With a lease, customers must operate and maintain the system themselves. Also, the rates are fixed. You will pay the same amount per month no matter how much energy your leased system generates. Leasing is most effective in the residential market
Through PPAs, customers can reduce their electricity costs and protect themselves against future price increases from electric utilities without the high up-front cost of installing their own solar power equipment. A PPA customer is not responsible for operating and maintaining its system. An agreement can range from 10 to 20 years and is utilized most in the commercial market. .
3) Who does Standard Solar partner with to provide leases and PPAs?
Through a partnership with SunRun, Standard Solar is able to offer residential customers the benefits of solar without the overhead of owning the system.
Standard Solar will provide turnkey design and installation of the system, while SunRun will care for the system offering a money-back guarantee on the system’s production as well as insurance for the systems, free monitoring and repairs. This program offers two payment plan options for Standard Solar customers to choose from:
- Total Solar – Low Upfront: Pay a little to get started and then pay monthly for solar electricity, saving every month on utility bills
- Total Solar – Prepaid: Pay below purchase price in advance and lock in a low rate for electricity for the next 20 years
These packages offer options that are better than the overall average cost of leasing a system and will help residential customers considering solar take advantage of alternative energy as an affordable solution.
Washington Gas Energy Services and Secure Futures are two companies that provide PPA financing to Standard Solar's commercial customers. Their efforts help customers find environmentally attractive solutions to turn solar project ideas into reality.
4) Standard Solar's systems in colleges and universities are funded through Power Purchase Agreements. What has been a recent success story utilizing a PPA?
Anne Arundel Community College:
Standard Solar answered the demand for electric power and covered parking spaces at Anne Arundel Community College (AACC) with the installation of a 753 kW solar system. The entire photovoltaic (PV) system was installed on top of a covered parking structure – the largest such system in Maryland and one of the largest carport systems on the East Coast.
The 3,100-panel system is expected to generate approximately one million kilowatt hours of electricity annually. All that clean energy is enough to power 100 average homes and is the environmental equivalent of eliminating greenhouse gas emissions from more than 77,000 gallons of gasoline.
The system is expected to provide about five percent of the college’s total electrical need and save the school approximately $300,000 over the next 15 years.
5) One of the largest PV installations in VA, at Washington and Lee University, is up and running, what makes this project different?
Washington and Lee University set an ambitious goal for their energy consumption – to reduce the level of greenhouse gas emissions by 20 percent in five years. In order to reach that, the University decided to invest in a duo of solar arrays that together, represent the largest system in Virginia.
Standard Solar installed 540 panels on an innovative steel structure design atop a parking deck ramp. The project will generate nearly 120 kW of clean energy, 166,000 kilowatt hours of electricity annually and will eliminate approximately 114 metric tons of carbon dioxide (CO2) in its first year of operations.
To turn their goal into a reality and make financing this project possible, the University entered into a long-term lease that will lower their long-term energy costs and help the school reach their goal of greenhouse gas reduction.
6) Are there any other unique installs Standard Solar has been a part of? What challenges did you face on the project and how will your solutions help advance future installs. How did this project impact the community?
University of Delaware Field House:
The solar array by Standard Solar on the University of Delaware Field House is not only the largest single rooftop installation in the state, but it also presented numerous challenges in design and construction. The Field House has a half-barrel shaped roof - ideal for catching the sun’s rays, but a safety and engineering concern for the design and construction phases.
Standard Solar overcame those challenges through customized innovations that can be now utilized for future installations. The 850 kW system by Standard Solar enabled the University to move toward its goal to reduce its carbon footprint by 20 percent by 2020.
Standard Solar's team took several measures that were both innovative and groundbreaking:
- Re-engineered mounting equipment and electrical conduit to fit the round roof of the Field House. Available components are typically installed on flat or inclined applications.
- Deployed a highly visible solar system for the University without impacting overall aesthetics / period architecture of the campus.
- Created a structured financing plan that would result in the lowest possible rate for the University. The agreement was set up as a Power Purchase Agreement that effectively locked in the electricity rate for the University for a period of 20 years.
The clean energy provided by the solar array will result in 1,810,000 fewer pounds of carbon dioxide emitted annually, while reducing the University's energy costs by 30 percent.
Customized innovations by Standard Solar addressing unique challenges can be utilized for other difficult installations in the future.
The 20-year Power Purchase Agreement with the University of Delaware is estimated to save the University between $1.5M and $2M with no initial cost to the University for the deployment. The solar system assisted the University in meeting the President's Climate Action plan - the University moved up nationally in the green campus ranking system.
7) Does a PPA save money for the customer? If so, can you give us an idea of the amount a typical small, medium and large PPA customer could save.
With a PPA, the customer has no capital outlay for the installment. As an example, a customer could see savings from what they are paying now at 10-12 cents per kilowatt hour, to a 20-year fixed contract with a rate of 9-10 cents per kilowatt hour. These types of scenarios are very attractive. They are saving from day one and with the cost of electricity expected to continue to increase, they have just locked in their rate for 20 years.
8) Is there an optimum project size where PPA’s are most effective in saving energy and cost?
The transactional costs can get quite expensive so the deal has to make sense financially. Standard Solar has completed projects as low as 200kw all the way up to multi-megawatts. The larger the deal, the more there is to absorb the transaction costs. If you have multiple 200kw deals under one PPA even better because it's all part of one PPA contract.
9) Who should be striving to utilize PPA strategies in their facilities --- in other words, who are your best customers and why?
PPAs are best for organizations that own their own buildings or homes. Or plan to occupy their space for an extended period of time.
Also, a property owner who has a large open property or rooftop space (such as a warehouse or distribution center) may also enter into a PPA in connection with a rooftop or property lease as a means to generate not only renewable energy, but also revenue from energy sales to the local utility.
10) How’s business been recently and are you optimistic for the coming year?
Our industry is strong and getting stronger. In the coming year we will see continued growth, but probably not at the rate that we've seen in the past.
Solar is the fastest growing energy sector in the U.S. The impressive growth of the U.S. solar industry has been fueled by federal, state and in some cases local government incentives. Now, with the solar industry very close to utility cost-competitiveness, we need to make sure those incentives are not eliminated.
Scott Wiater, president, Standard Solar
Under Mr. Wiater’s leadership, Standard Solar has been named one of the Fastest Growing Private Companies in America in 2010 and 2011 according to Inc. magazine, significantly expanding its commercial footprint and reinforcing its leadership positioning as the solar partner of choice. Mr. Wiater has an extensive background in executive management, operations and supply chain management in startup companies as well as established corporations. Previous positions included Executive Vice President at Peak Technologies, a global systems integration company, and Director of Operations for Radio Frequency Identification at Motorola (Symbol Technologies). Mr. Wiater earned a Masters of Business Administration degree and a Bachelors of Science degree in Aeronautics from Embry-Riddle Aeronautical University.
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