Power Purchase
Agreement for Solar
Photovoltaics
January 6, 2009
Why Renewable Energy?
Implement our Energy Policy
Energy Efficiency (Highest Priority)
Green Building
Renewable Energy
Public Outreach
Utility Rate Tariff Optimization
Reduce GHG emission; Renewable Energy Credits (REC)
Hedge utility costs
Gain experience in self generation
LEED credits for Vanguard Building
Prepare for Peak Oil
Power Purchase Agreement
Agreement between energy user (COV) and project developer
(MMA/SPI)
Developer installs solar system while we agree to purchase
electricity from developer at predetermined price for specified term
(20 years).
Developer retains system ownership, which may be sold to us
during or at the end of the term.
Three buildings selected – Saticoy GSA and PWA buildings and
Vanguard Building.
PPA characteristics
Capital cost and maintenance cost by developer.
Take or pay commitment by COV
Fixed price of $0.133 per KWh with 3% annual escalation
PPA allows developer to take advantage of tax incentives
Financial contract is signed with MMA while SPI is the construction
company that will build and maintain the system.
PPA Financials
Cost neutral or better
Utility budget is simply re-directed from SCE to another electricity
provider.
Separate financial analyses conducted by MMA/SPI, SCE, and COV.
Key variable is SCE rate tariff and escalation. SCE’s proposed 15% to
18% rate increase will impact the project favorably.
California Solar Initiative incentives assigned to MMA.
Environmental attributes including Renewable Energy
Credits (RECs) are retained by MMA to maximize financial
payback to the COV.
There is a 1 cent per kWH cost premium to retain the RECs.
End of Term Options
Several options to COV at end of term:
Renew PPA based on market conditions at that time;
MMA/SPI restores site to original condition;
COV purchases system at fair market value or PPA buyout price.
If system is purchased at end of term, subsequent power
generati