Onsite Power Purchase Agreements (PPA)

Onsite Power Purchase Agreements (PPAs) are a contract between a project developer (and likely backed by a financial counterparty) and a retailer. The project developer owns, operates, and maintains the renewable system for a term of typically 15-25 years. The retailer agrees to pay for all the system production at a fixed price for the life of the agreement. PPAs provide retailers the ability to: offset on-site electricity consumption, potentially reduce Scope 2 carbon emissions, and provide a long-term hedge and/or savings opportunity against future electricity prices. PPAs offer a unique method for retailers to install onsite solar or other alternative distributed generation technologies as compared to capital purchases because there are no up-front cash outlay and capital expenditures (CAPEX) considerations.