Electrical costs have been steadily rising for over 30 years and are expected to keep going.   

Highwire Energy has a ways for business to hedge energy inflation that saves money and adds comfort. Finally, your organization or business can go green with energy that makes solid economic sense.

25 year cash flow demonstrates system cost and value. Note that individual system cost and design value vary due to site location, orientation, local conditions, etc. In addition to the 30% federal investment tax credit shown, these systems may be eligible for State Rebates or Tax Credits, Accelerated Asset Depreciation Schedule, Renewable Energy Credits or banking of credits for future sale, Utility Incentives, Feed-In Tariffs, Revenue from future sale of Power Plant. more.

Power Purchase Agreement

Ecobaun Energy offers a landmark commercial energy solution that provides savings for business, government agencies, non-profit organizations, and schools without outright purchase. A PPA or Power Purchase Agreement can lock in a long-term energy rate that insures future energy costs against unstable increases in energy rates.

Power Purchase Agreements also provide savings in the short term. With no equipment cost for system installation with high output and comfort, your organization can enjoy energy that saves money.

Dependable, affordable, renewable and easy to acquire. It does not deplete any earth resource, connects to existing electrical grid and can lock in long-term electricity rates, putting you in control over energy inflation.  

With a PPA arraigned by Ecobaun, your organization can enjoy balanced, high output, clean power within reach.

PPA Defined

A Power Purchase Agreement (PPA) is a legal contract between an electricity generator (provider) and a power purchaser (buyer). Contractual terms may last anywhere between 15 and 20 years, and during this time the power purchaser buys energy, and sometimes also capacity and/or ancillary services, from the electricity generator. Such agreements play a key role in the financing of independently owned (i.e. not owned by a utility) electricity generating assets. The seller under the PPA is typically an independent power producer, or "IPP." Energy sales by regulated utilities are typically highly regulated by local or state government, so that no PPA is required or appropriate. Commercial PPA providers can enable businesses, schools, governments, and utilities to benefit from predictable, renewable energy.

In the United States, the Solar Power Purchase Agreement (SPPA) depends heavily on the existence of the solar investment tax credit, which was extended for eight years under the Emergency Economic Stabilization Act of 2008 The SPPA relies on financing partners with a "tax appetite," profits that are subject to taxation, who can benefit from the federal tax credit. Typically, the investor and the solar services provider create a special purpose entity that owns the solar equipment. The solar services provider finances, designs, installs, monitors, and maintains the project. As a result, solar installations are easier for customers to afford because they do not have to pay upfront costs for equipment and installation. Instead, customers pay only for the electricity the system generates. With the passage of the Amercian Recovery and Reinvestment Act of 2009 the solar investment tax credit can be combined with tax exempt financing, significantly reducing the capital required to develop a solar project.

Financing

The PPA is often regarded as the central document in the development of independent electricity generating assets (power plants), and is a key to obtaining project financing for the project. Under the PPA model, the PPA provider would secure funding for the project, maintain and monitor the energy production, and sell the electricity to the host at a contractual price for the term of the contract. The term of a PPA generally lasts between 5 and 25 years. In some renewable energy contracts, the host has the option to purchase the generating equipment from the PPA provider at the end of the term, may renew the contract with different terms, or can request that the equipment be removed. One of the key benefits of the PPA is that by clearly defining the output of the generating assets (such as a solar electric system) and the credit of its associated revenue streams, a PPA can be used by the PPA provider to raise non-recourse financing from a bank or other financing counterparty

Contract Timeline

Effective Date

The PPA is considered contractually binding on the date that it is signed, also known as the effective date. Once the project has been built, the effective date ensures that the purchaser will buy the electricity that will be generated and that the supplier will not sell its output to anyone else except the purchaser.

Commercial Operation

Before the seller can sell electricity to the buyer, the project must be fully tested and commissioned to ensure reliability and comply with established commercial practices. The commercial operation date is defined as the date after which all tested and commissioning has been completed and is the initiation date to which the seller can start producing electricity for sale (i.e. when the project has been substantially completed). The commercial operation date also specifies the period of operation, including an end date that is contractually agreed upon.

Preemptive Termination Date

Typically, termination of a PPA ends on the agreed upon commercial operation period. A PPA may be terminated if abnormal events occur or circumstances result that fail to meet contractual guidelines. The seller has the right to curtail the deliverance of energy if such abnormal circumstances arise, including natural disasters and uncontrolled events. The PPA may also allow the buyer to curtail energy in circumstances where the after-tax value of electricity changes. When energy is curtailed, it is usually because one of the parties involved was at fault, which results in paid damages to the other party. This may be excused in extraordinary circumstances such as natural disasters and the party responsible for repairing the project is liable for such damages. In situations where liability is not defined properly in the contract, the parties may negotiate force majeure to resolve these issues.

Operation and Metering

Maintenance and operation of a renewable technology project is the responsibility of the seller. This includes regular inspection and repair, if necessary, to ensure prudent practices. Liquidated damages will be applied if the seller fails to meet these circumstances. Typically, the seller is also responsible for installing and maintaining a meter to determine the quantity of output that will be sold. Under this circumstance, the seller must also provide real-time data at the request of the buyer, including atmospheric data relevant to the type of renewable technology installed.

Sales

Delivery Point

The PPA will distinguish where the sale of electricity takes place in relation to the location of the buyer and seller. If the electricity is delivered in a bushbar sale, the delivery point is located on the high side of the transformer adjacent to the project. In this type of transaction, the buyer is responsible for transmission of the energy from the seller. Otherwise, the PPA will distinguish another delivery point that was contractually agreed on by both parties.

Pricing

Electricity rates are agreed upon as the basis for a PPA. Prices may be flat, escalate over time, or be negotiated in any other way as long as both parties agree to the negotiation. A PPA will often specify how much energy the supplier is expected to produce each year and any excess energy produced will have a negative impact on the sales rate of electricity that the buyer will be purchasing. This system is intended to provide an incentive for the seller to properly estimate the amount of energy that will be produced in a given period of time.

Billing and Payments

The PPA will also describe how invoices are prepared and the time period of response to those invoices. This also includes how to handle late payments and how to deal with invoices that became final after periods of inactivity regarding challenging the invoice. The buyer also has the authority to audit those records produced by the supplier in any circumstance.

Performance initiatives

The buyer will typically require the seller to guarantee that the project will meet certain performance standards. Performance guarantees let the buyer plan accordingly when developing new facilities or when trying to meet demand schedules, which also encourages the seller to maintain adequate records. In circumstances where the output from the supplier fails to meet the contractual energy demand by the buyer, the seller is responsible for retributing such costs. Other guarantees may be contractually agreed upon, including availability guarantees and power-curve guarantees. These two types of guarantees are more applicable in regions where the energy harnessed by the renewable technology is more volatile.

Example Contracts

A basic sample PPA between the United States Department of Energy and Bonneville Power Administration was developed as a reference for future PPAs. Solar PPAs are now being successfully utilized in the California Solar Initiative's Multifamily Affordable Solar Housing (MASH) program. This aspect of the successful CSI program was just recently opened for applications. Delmarva Power and Light company has recently entered into a WPPA with Bluewater Wind Delaware LLC.