Solar Power Purchase Agreements

[sandnsea]

Does anybody know anything about these? Sounds like a good idea, but I always worry when I see Wal-mart in an article.

"..Then, a Silicon Valley start-up called Sun Run offered Crawford a way to go green without straining his wallet. Last month, the company installed a 3.8-kilowatt system on his pitched roof for $6,000. Crawford, 62, says he'll immediately save money on his electric bill. Sun Run monitors and maintains the system, replacing worn parts at no extra cost.

It's one of several companies upending solar's traditional business model by supplying systems to homes and businesses at minimal or no cost, owning and maintaining them, and charging customers for the power they use — much like a utility. Yet unlike a utility, these firms typically charge a bit less than standard electric rates.."

"Under these typically 20-year contracts, businesses pay no money upfront. With such favorable terms, PPAs have exploded among companies and government users...


http://www.usatoday.com:80/money/industries/energy/environment/2008-03-30-solar-energy-utilities_N.htm

[kristopher]

1. PPAs in general, or PPAs for solar, they are the same.

It is an agreement to purchase and supply power. Without one, a generating entity sells power on the open market and takes chances on the profitability of the endeavor. With one, the power production is sold in advance and, if the planning was properly done, at a profit. The biggest functional difference is the financing that is available with a PPA is cheap because risk is low. Without a PPA the risk to investors is substantially higher and the expected ROI reflects that increased risk. You are talking a difference of between maybe 4-5% and 18%.
This is a huge factor in promoting renewables.