Everyone’s pretty au fait with the general shape of a PPA – renewable developer meets end user, and both live happily ever after with a mutually beneficial purchase agreement – but for many people the rest of the details are a little hazy. There’s a lot more to a PPA than just settling on a rate, so let’s lift the curtain a little.
If we’re being honest, the main draw of any PPA is, of course, the chance to fix your business costs. However, this isn’t always as easy as just picking a number. Setting the wrong price can be a real disaster for solar developers, making it impossible to deliver the solar PV farm within their budget. Fortunately, prices for solar hardware have fallen significantly, making it easier and easier for developers to keep costs reasonable and offer an attractive rate, even without subsidies.
Development and Planning
Strangely, one of the most frequently overlooked aspects of a PPA is the ability to plan and develop a solar PV farm to generate electricity for your business. Developing a solar farm in the UK is no longer the uphill struggle it once was, but there are still many boxes to tick, including obtaining planning permission and getting support from the local community. Remember, you’re not just securing a source of solar electricity for your business, you’re creating a homegrown asset that communities can be proud of.
Like most documents representing relationships designed to last upwards of 20 years, PPA contracts are often complex and lengthy. With a typical agreement stretching over 60 pages, drawing up and negotiating a robust, mutually beneficial contract is no small feat. Luckily, the actual structure of a basic PPA is in itself not particularly tricky – a simple agreement between a seller and a buyer- it’s the legalese that adds the weight.
Once the PPA is signed and the solar farm is built, connected and generating electricity for your business, it’s easy to imagine that’s that, and in many ways it is. Solar is a passive technology, there are no moving parts, no need for fuel or operators, so a solar power plant doesn’t require anywhere near the amount of supervision needed by other power sources. However, to make sure your business is getting as much power as possible from the PPA, the solar site will need to be monitored and maintained throughout its lifecycle. Panels need cleaning, grass needs cutting, etc, otherwise you run the risk of falling levels of solar production over the years.
So there you have it. Some (far from all) of the building blocks of a successful solar PPA. With any luck, the future of energy procurement will rest on them!
Nick Boyle is the CEO of Lightsource.
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