Power Purchase Agreement – The Solution for Your Next Solar Project

A Power Purchase Agreement (PPA) is a great way for a company or non-profit organization to pay a fixed or controlled rate for power over a 15 or 20 year period. The PPA electric rate is generally significantly discounted compared to the utility rate for the same energy. The company or host, only pays for the power they use as long as they meet a predetermined minimum. The PPA can be of particular benefit to groups which cannot use the investment tax credit like non-profits because the lender passes on the tax credit and depreciation savings in the form of a lower electric rate.

The key to determining if a PPA will work for you is to: analyze 12 months of utility bills, review average usage, calculate solar system cost and production and then determine if the PPA rate will offer significant savings over the utility rate. If that evaluation is favorable, and both the host and developer have strong credit, then a PPA may be the best solution for you or your client.

PPA benefits include:

• Lower costs with a structured PPA compared to utility rates
• Gain the tax credit and depreciation benefits which otherwise may not be available
• Long 15 or 20 year terms with early fair market value buyout available
• No upfront capital costs
• All install, hardware and maintenance expenses included in the PPA rate
• Annual escalation usually lower than utility rate increases
• Enhances property value

How Non-Profits benefit: Non-profits cannot benefit from the application of the tax credit (ITC and depreciation) unless the Provider (a Special Purpose Entity) can establish and maintain the solar system and supply power to the user as a service. The SPE then takes the tax incentives and monetizes it to make the energy system more cost effective. This is a great option to a lease or loan program.

Other finance solutions we offer include Capital Leases and Operating Leases from 3-7 years for solar and other types of equipment and Municipal financing up to 20 years. Each program can include all shipping, labor, material and consulting fees in one total project price. Contact us with any questions for any business financing needs.