Explaining a Power Purchase Agreement (PPA)

Alpha Power Group Video Learning Series 2

[zolarczakl]

I am nearing 3 years into a 20 year PPA contract. My price per kWh started of at .159 (or 15.9 cents) per kWh. I calculated the 2.9% annual increase all the way to year 20, and it comes out to .274 (or 27.4 cents) per kWh at the end of the contract. In my case, I calculated my entire year of 2016 kWh usage in regular grid electricity and the total I paid for the year. That kWh rate - in 2016 - was .283 (or 28.3 cents) per kWh. So, in my case, even at the end of my contract, the rate will never reach that of 2016. And I expect the grid electricity will rise between now and 2037!
Of interest, I don't pay directly to the grid, although I'm still tied to the grid. My excess electricity is sold back to the grid by net-metering. I live in a state where net-metering is very consumer friendly. There is no cap to how much you can sell back to the grid. When the grid raises their rates, they have to credit my account accordingly. The more they charge, the more they have to pay in credits.
So, in short, according to my calculations, I will ALWAYS pay less to the solar provider per kWh than I will to the grid, and as time goes on, will likely even make more in the way of credits from net-metering.

[josefvillarama]

The best video I've seen explaining the PPA. I've sent this link to all my potential leads. Thank you for this!

[XxStonedImmaculatexX]

Some guy knocked on my door and I was ready to ask him to leave but he introduced me to this solar PPA so I heard him out and I like the idea, especially since I don’t qualify for the tax credits.

So I asked him to come back with his designs engineer and we’ll go over things next week. And I gave him a cup of cool water since the poor guy is going door to door in 99F weather 😆

🥵

[BANKO]

But is the escalation compounded over 20 years? Does this cover all transmission and supply costs? Natural gas prices have been falling significantly for 15 years even though power prices rise because of network and supply costs. This puts a lot of risk on the PPA holder. For example, a 3% escalator will mean that in the 20th year, the price of power will have nearly doubled.

[PRAVEENKUMAR-ildd]

if the IPP modifies the proposed istall value.will it require any changes in terms and and warrenty for rebidding?

[Alonso-mz]

I always recommend the PPA options, especially here in California. Historically you can look at Edison‘s increases in the past 10 years alone they’ve been 80% plus now compare that to the new escalator of 3.5%. It’s a big difference to make it even better. Edison is actually proposing an increase of 20% plus by the end of 2025 on top of that, I’m already giving my homeowners more power than what they’re already using. This leads to them getting credits back from Edison getting paid for their power To make it even better... They get 25 year warranties and I can throw in a roof with a 10 year warranty. now I know not everybody does this, but I even help out homeowners if they are backed up on their bills. I love this job. Find yourself who is ethical and hear him out.

[MorbozHn]

Best explanation I've seen so far . Great video

[thomasrquintero]

Hey I think someone texted you at 2:31

[JoelArroyo-spfx]

Very informative! So, to be clear is it safe to say that there is never a fixed payment per month with a PPA due to the fluctuations based on energy generated? Thanks for this clarification and taking the time out to create for the masses.