Power Purchase Agreement Amortization

The District of Columbia Department of General Services has commissioned Sol Systems to develop one of the largest on-site solar projects in the United States on a 12-month line with a single power purchase contract. The project includes 35 institutions, including schools, hospitals, police and more. At regency Saugus Center in Massachusetts, the national owner of the Regency Centers retail center partnered with tenant Trader Joe to install a 253 KW solar installation on the roof. Regency Centers owns the solar facility and sells the solar generated at a discount to Joe Traders, which reduces about 65% of their total electricity consumption with clean electricity. In order to qualify for an AAE, a project must be located in a state or jurisdiction where ownership of a third party of power generation facilities is permitted. Some state rules limit or limit the sale of electricity in regulated markets. For more information on where PPAs are available, see database of State Incentives for Renewable Energy (DSIRE). The distribution company that serves the customer provides a connection between the power system and the power grid and will continue to operate if the system does not produce enough electricity to meet the customer`s electrical needs. If the system produces excess electricity, it can be sold to the distribution company, usually at the price of electricity in the retail trade. This process is called network measurement and most states have adopted network measurement guidelines. For more information on network measurement, see the NSL Status Assessment Policy Overview.

Contracts to purchase electricity as a financing mechanism for decentralized generation systems were concluded around 2006 and quickly gained power in the market within a few years. A report by the National Renewable Energy Laboratory (NREL) found that in 2015, PPAs reported nearly 2 gigawatts (GW) of signed capacity in the United States after significant annual increases since 2012. According to the Public Renewable Energy Incentives Database (DSIRE), PPAs are available in 26 states, plus Washington, D.C. For details on which states allow PPAs, see this map from DSIRE or see its database. The power purchase agreement (AAE) is an agreement in which a third-party supplier installs, owns and operates an energy system on a customer`s field. The customer then buys the electrical power of the system for a predetermined period. An AAE allows the customer to obtain stable and often inexpensive electricity at no prior cost, while the system owner can simultaneously benefit from tax credits and revenue from the sale of electricity. Although PPAs are the most widely used for renewable energy systems, they can also be applied to other energy technologies such as cogeneration. An alternative to a direct AAE with on-site power generation is an offsite AAE, also called virtual or synthetic AAE. Under an offsite AAE, the customer and the renewable energy project must not be in the same region. This gives customers more options to select projects and allows customers to use PPAs in countries where PPAs are not available locally or where there are physical space restrictions that would prevent the installation of production devices.