Complementing development expertise is an equally advanced ability to provide flexible approaches to make projects financially attainable. This ability to get-it-done stands out every bit as prominently as the technology behind each renewable solution. Two examples:
Power Purchase Agreement – a PPA is a long-term contract between the developer and the entity buying the electricity generated by the project. PPAs typically come in two forms. The first one is a Physical PPA where the power is delivered directly to the end user. The second approach is a Virtual PPA where power is delivered to the grid and the end-user benefits from a financial hedge against any increases in the price of electricity.
Customers may elect to purchase the solar system directly or finance the system under a lease. However, PPAs provide a number of benefits over the course of a typical contract term, usually 20 years or more:
- No capital expense required – the only cost to the customer during the PPA term is the purchase of the solar energy generated, thus freeing up the customer's capital for other uses (some nominal in-house administrative costs may apply to facilitate the PPA contracting process).
- Energy hedge – this means delivering a stable, predefined energy rate ($/kWh) over the life of the PPA. A locked-in rate protects against volatility in utility rates over time. Predictable energy costs also allow for more accurate budget forecasting, which is particularly important when seeking a balanced budget.
- No performance or operational risk – the development team is responsible for all risks and costs associated with operations and maintenance. This includes 24/7 system monitoring, performance optimization, and preventive and reactive maintenance, including hardware replacement resulting from normal use, vandalism and theft. Also, unlike a fixed monthly lease payment, the customer is responsible only for purchasing the energy produced.
- Full design and engineering capabilities – an outside team of experts oversees all stages of design and engineering to ensure that high-quality standards are being met during the pre-construction stage.
- Start-to-finish presence – construction management oversight is provided throughout the process to ensure that all practices and materials meet predefined specifications.
- Overall optimization – an Asset Management Services team continually monitors and maintains the solar facilities to ensure they are optimized for maximum solar production.
Renewable Energy Certificates – RECs are tradable energy commodities which represent proof that 1 megawatt-hour (MWh) of electricity was generated from an eligible renewable energy resource. Solar Renewable Energy Certificates (SRECs) are RECs that are specifically generated by solar energy.
The value of these certificates can be monetized, and a market for them can be created. In the U.S., the majority of these certificates sold represent electricity generated by wind turbines, but the number of SRECs available increases every year.
In some states, SRECs are used as the incentive instrument to promote the use of solar power. This is known as a "compliance market." In these areas, the utility is buying the certificates from your system in order to meet their Renewable Portfolio Standards requirements.
In states without compliance markets, there are voluntary markets for SRECs. In voluntary markets, customers – from large corporations to individuals – buy SRECs in order to claim that their energy supply is produced by renewable power, usually for policy or marketing goals. (In a voluntary market, you must own the SRECs produced by your PV system in order to claim use of solar power. Only the SRECs owner can cite use of solar in marketing materials and to meet policy goals.)
According to GreenTech Media, 16 states and Washington, D.C. have specified a portion of the renewable requirements for solar alone. Seven of those states have markets specifically aimed at the trading of SRECs.
For a state-by-state list of renewable incentives, go to DSIREusa.org, a project of the North Carolina Solar Center, North Carolina State University and the Interstate Renewable Energy Council Inc.