Solar PPA

What is a solar PPA?

A solar power purchase agreement (PPA) is a financial agreement in which a developer agrees to build, own, and operate a solar energy system on a user’s property. The user is called the “off-taker”. The off-taker agrees to purchase the electricity generated by the system at a fixed price per kWh for a set period of time, usually 15 to 25 years.

Why is a solar PPA a good idea for a company?

There are several reasons why a PPA might be a good idea for a company:

  1. Cost savings: by locking in a fixed price for renewable energy, a company can potentially save money on its energy bills compared to purchasing electricity from the grid.

  2. Risk management: a PPA can help a company manage its energy price risk by providing price stability over the term of the agreement.

  3. Sustainability: PPAs can help a company reduce its carbon footprint and meet its sustainability goals.

  4. Reputation: by sourcing renewable energy through a PPA, a company can enhance its reputation as a socially responsible and environmentally conscious business.

Onsite or Offsite

An onsite solar PPA comes from a solar system installed on the user/off-taker’s site - roof, parking lot or field, while an offsite solar PPA is for green electricity produced outside the user’s premise.

An offsite PPA can either be “physical” where the electricity is “sleeved” through the grid to your point of use; or “virtual”, i.e. a financial agreement without the physical transmission of electricity.