November 23, 2020
A power purchase agreement (PPA) is a buying structure for the purchase of renewable energy. In states like Arkansas, where PPA statutes have been enacted, power purchase agreements have facilitated solar energy projects for schools, businesses, homeowners, landowners, and more.
What is a Power Purchase Agreement?
A power purchase agreement (PPA) is a contract between a provider and a buyer used to finance and implement renewable energy projects. The provider in a PPA is generally an independent electricity generator or a system owner. The buyer/offtaker purchases power from the provider/developer at an agreed-upon rate for a specified period of time—without taking ownership of the solar PV system. Essentially, a PPA allows the buyer to purchase the services of a solar power system without purchasing the system itself.
The popularity of power purchase agreements is down to their ability to facilitate a predictable, low-cost energy supply, along with renewable energy certificates and tax credits, without substantial upfront costs. Power purchase agreements have been extremely beneficial in the growth of various sectors of the solar industry. For utility-scale solar projects and solar farms, a PPA ensures stable, long-term revenue, allowing for easier financing of these projects. PPAs have also boosted the growth of residential rooftop solar in a number of states nationwide.
Power purchase agreements come in different forms, including physical PPAs, virtual PPAs, and sleeved PPAs, all of which you can read about on the YSG website.
Arkansas Power Purchase Agreements
Arkansas is one of fifteen states which has enacted legislation relating to the authorization and regulation of power purchase agreements. Arkansas legislation authorizes utilities to enter into power purchase agreements. However, utilities are prohibited from entering into a PPA longer than 5 years, or recovering the cost of a PPA in rates, unless the following conditions are met.
The cost is reasonable.
The agreement would provide savings for retail customers.
It is required by public necessity.
It is necessary to ensure incremental supply to rectify shortage.
Applications for a power purchase agreement via Entergy Arkansas are generally due in Spring of each year.
Arkansas Power Purchase Agreements for Schools
For Arkansas schools in particular, power purchase agreements have led to huge energy cost savings, allowing administrators to invest these savings in better pay for teachers and better education for students. Below are some notable Arkansas solar school projects that have led to big savings for school districts throughout the state.
Arkansas Schools & Solar Projects
One of the mostable notable success stories for solar & schools comes from Batesville, Arkansas. With 759 kW of capacity installed at Batesville High School and Jr. High School, Batesville School District superintendent Dr. Michael Hester has used the solar savings to revitalize the school district. With savings from the solar installation—$2.4 million gross solar savings over twenty years as guaranteed by an energy savings performance contract from developer Entegrity—Hester has been able to funnel the savings into teacher pay, improving the standard of education for the entire Batesville student body. Going solar has also boosted overall awareness of carbon footprint, with teachers embracing energy efficiency practices thanks to the clear link between energy savings and increased pay. What better testimonial for the value of solar in schools than seeing the savings go directly towards better pay for teachers and a higher quality of education for the students?
It’s not just Batesville either, more schools are following suit. A few months ago, the Fayetteville school board voted to approve a solar energy project which is estimated to save the school district over $9.8 million—with no upfront costs. Nabholz, the vendor approved to carry out the 2020 Solar Energy Project, will also use Fayetteville energy services company Entegrity to purchase land for the project, in addition to installation and O&M services for the duration of the contract. The project will include the construction of two solar panel arrays, a one-megawatt array and a five-megawatt array, both located in Fayetteville.
Solar Farms & Solar Land Leasing
A power purchase agreement is an excellent financing mechanism for the development of solar farm projects. A PPA allows developers and landowners/hosts to work together in establishing a profitable solar farm. Leasing your land for a solar farm is a straightforward way to generate a predictable, consistent income stream for you and your family for decades to come. YSG Solar will enter into a power purchase agreement with you, the landowner, to facilitate the development of the solar farm project, paying you an agreed-upon per-acre rent on an annual basis. If you’re interested in learning more about solar farm land leases, please consult our website, where we have covered the topic extensively. Some of our most popular solar farm articles include:
Are you interested in leasing your land for a solar farm in Arkansas? Or entering into a power purchase agreement to save on your energy costs? YSG has been operating in the solar sector for over ten years and can show you exactly how to secure the best solar savings in Arkansas. We will guide you through the entire process from start to finish to ensure the greatest return on your investment in the shortest period of time. To get started or learn more, send us an email or call at 212.389.9215 today.
YSG Solar is a project development vehicle responsible for commoditizing energy infrastructure projects. We work with long-term owners and operators to provide clean energy assets with stable, predictable cash flows. YSG's market focus is distributed generation and utility-scale projects located within North America.
Sources:
https://www.ncsl.org/research/energy/state-policies-for-purchase-agreements.aspx#Arkansas
https://www.arkansasonline.com/news/2020/sep/25/fayetteville-school-board-approves-cost-saving/
https://www.seia.org/sites/default/files/2020-09/BF%20EMBARGOED_FullReport_FINAL.pdf
Featured Photo by Element5 Digital on Unsplash.