Power Purchase Agreements (PPA)
The Energy Action Group (EAG) provides Power Purchase Agreement (PPA) options to help members.
The Energy Action Group (EAG) provides Power Purchase Agreement (PPA) options to help members with a wide variety of projects and renewable generation.
With a power purchase agreement (PPA), organisations with land and buildings can find ways to generate income from underutilised assets whilst also combating climate change.
Many charities and not-for-profits may be overlooking potential sources of revenue. By utilising power purchase agreements (PPA) you can mitigate costs, fund renewable energy development, lower overall utility costs and generate working capital.
By entering into a long-term power purchase agreement, you can monetise land, roofs, and carparks. A PPA provides a reliable source of revenue for the length of the contract and can make the resulting power competitively priced on the open market.
What is a PPA?
PPAs are contractual agreements where generators agree to sell the power generated from a variety of generation assets such as solar, wind, CHP units, gas generation, hydro, anaerobic digestion, landfill gas or waste and biomass. The most common of these is solar PV.
The Power Purchase Agreement (PPA) is normally a long-term contract between a person or organisation generating electricity or gas (the seller) and a second party wishing to purchase the generated power (the buyer). The buyer could be a trader or consumer. The PPA contract defines the terms and conditions under which the agreement operates.
If you generate electricity, or create biogas, and wish to sell all or part of it to the grid you will need to enter into a Power Purchase Agreement contract (PPA). However, you are unlikely to get the best rate by simply engaging with your current electricity supplier and it pays to shop around.
The EAG can undertake this work on your behalf and verify which type of PPA would be most suitable for you. The last thing you want is to go to the expense of generating power and not reaping the benefits.
Are you considering investing in Solar Power?
If you are considering investing in renewable energy generation Power Purchase Agreements provide the security that your project needs and will bring the necessary return on your capital investment upon completion. A PPA also reduces cash flow uncertainty.
PPAs enable the sale of a portion of a project’s future energy generation over the long-term (from 3 and up to 30 years) to an energy buyer. Typically, parties often agree and sign a PPA contract before a project starts.
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If you are interested in renewable energy there are a variety of purchase models:
1. Self-Financing
Self-financing is the most popular option for purchasing commercial solar panels. This option presents the best financial returns over the lifetime of a renewable energy system and provides the most rapid return-on-investment (ROI).
Some organisations will be eligible to offset up to £100,000 of their investment in tax through the annual investment allowance.
2. Solar PV Power Purchase Agreement
A power purchase agreement (PPA) is one of the most popular ways of financing commercial solar panels. If your energy usage and roof space meet specific criteria, this solution could offer you the benefit of a free solar PV installation, financed by a PPA provider.
Electricity generated by the system is then sold back to you at a rate much cheaper than your current energy prices, saving you significant money on your bills and providing your business with all the benefits of solar PV.
3. Renewable Energy Finance: Asset Finance
There are numerous finance collaborators willing to finance renewable energy via an asset finance plan. When structured properly your asset finance payments could be less that your savings on electricity, meaning that your business could be cash positive from day one.
How you benefit
- By exploring a range of supplier options and comparing the net benefits we provide you with a transparent analysis comprised of offers from a wide selection of power purchasers. We analyse these offers on your behalf, so you can compare like-for-like results with a focus on income forecasts.
- Of course, you can carry out this exercise yourself although it can be tedious and complicated. We can undertake the whole exercise on your behalf, and we would be delighted to discuss your project.
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Local carbon emissions per person
One tonne of CO2 fills a typical large hot air balloon (almost 3,000 cubic metres in volume). If our emissions in our local area were released in hot air balloons, the sky above us would be jammed with more balloons than we could count, every day of the year.
Source: BEIS Local Authority territorial CO2 emissions within the scope of influence of Local Authorities (2018).
Sell Electricity
Are you generating your own electricity? If so, the EAG can help you arrange the best PPA’s, whether you are a dedicated energy generator or a business with onsite generation. We can also intervene if you have already been offered a PPA. We can review the offer and determine if the offer is worth your while, or if there are better options.
We deal with Fixed price PPAs that lock in the price at the point of signing the contract. This means you can calculate exactly what levels of income you receive over the term of the contract (based on generation) and reduces the effect of price fluctuations in the market.
Note: You will require an Export Meter for your solar installation and a Power Purchase Agreement. Find out more here…