Solar power purchase agreements: Look before you leap

Solar power systems have become a popular option for institutions interested in clean, renewable energy. Many times, they will finance their photovoltaic solar systems by entering into a power purchase agreement, or PPA, with an energy service company or solar power provider that installs the equipment and then sells the electricity to the client at an agreed price. These long-term contracts usually last about 25 years, after which the client may have the option to purchase the equipment it’s been using.

PPAs are attractive to school districts and county offices of education because they can provide the benefits of solar energy without a substantial upfront capital investment. However, they’re not without risk. Some include rate increases and financing charges that may not be adequately disclosed, or the proposed system may not be suited to a client’s conditions and needs.

“There are significant financial risks,” warned Nancy Rorabaugh of Innovative Energy Services Inc. The firm recently partnered with CSBA to review PPAs on behalf of CSBA members. “We act as an advocate for schools to protect them and mitigate those risks,” Rorabaugh explained.

Innovative Energy will provide an independent, third-party assessment of proposed photovoltaic systems and PPA contracts to make sure there are no hidden costs. If desired, it can also manage the request for proposal process on a client’s behalf, negotiate a favorable contract with the vendor whose bid best meets the client’s needs or oversee the entire project according to desired specifications.

“Districts and county offices interested in such a long-term commitment are looking for someone to help them complete their due diligence, and we can provide that assistance to shepherd this process and help ensure a positive outcome for such a long-term investment,” Rorabaugh said. “We’ll draft the RFP, negotiate the contract for you, verify you’re getting the proper size and type of equipment, and provide project oversight to make sure it’s installed as detailed in the contract,” she advised.

For more information, contact Rorabaugh at 800-500-6711 or rorabaugh@innovativenrg.com.