Power Purchasing Agreement facts for kids

A Power Purchasing Agreement (PPA) is a special agreement between a company that provides electricity and a person or group that owns land or a building. This agreement lets the electricity company set up equipment, like solar panels, on the owner's property. Then, the owner buys the electricity produced by those panels directly from the company.

This deal is often used with solar power. A solar company will install, run, and take care of solar panels on a building's roof. The building owner then buys the electricity made by these panels. A big part of the PPA is setting a price for this electricity. This price is usually lower than what the owner used to pay for electricity from the regular power lines. If the solar panels don't make enough electricity, the owner buys the rest from the power grid. If the solar company makes more electricity than the owner needs, they can sell the extra back to the power grid.

What is a Power Purchasing Agreement?

A Power Purchasing Agreement, or PPA, is like a long-term rental agreement for electricity. Instead of buying solar panels, you agree to buy the electricity they produce. This agreement helps people and organizations get clean energy without having to pay for the expensive solar panels themselves.

How Does a PPA Work?

When you sign a PPA, a solar company agrees to put solar panels on your roof or land. They pay for all the equipment and the installation. They also take care of any repairs or maintenance needed for the panels. In return, you agree to buy the electricity that the panels produce at a set price.

Solar Power and PPAs

Solar panels turn sunlight into electricity. With a PPA, the solar company owns these panels on your property. They handle everything from putting them up to making sure they work well. This means you get to use clean solar power without the big upfront cost of buying and installing the panels yourself.

Who Uses Power Purchasing Agreements?

Many different groups like to use Power Purchasing Agreements. Schools and government buildings often choose PPAs. This is because they might not have enough money to buy and install solar panels on their own. Large department stores also find PPAs helpful. They have huge roofs perfect for solar panels but don't want to deal with the costs of putting them in or keeping them running.

How Long Do PPAs Last?

Power Purchasing Agreements usually last for a long time, often between 5 and 20 years. When the agreement ends, there are a few choices. The contract can be extended, meaning you keep buying solar power. The solar panels can be taken off the property. Or, the land owner can choose to buy the solar panels from the electricity provider.

Why Are PPAs Important for Solar Energy?

Power Purchasing Agreements have played a big role in helping more people use solar electricity, especially in the United States. They make solar power more accessible because you don't need to pay a lot of money upfront. This helps more homes and businesses switch to clean energy.

Government Support for Solar

One reason solar panels have become more affordable for companies is because of Investment tax credits. These are special financial benefits from the federal and state governments. These tax credits can help pay for a large part of the cost of a solar project. This makes it easier for solar companies to offer PPAs at a good price.

Companies Offering PPAs

Some of the companies that offer Power Purchasing Agreements include:

• SunEdison
• Tioga Energy
• Recurrent Energy
• SunRun Inc
• SunPower Corporation