Power Purchase Agreements Make Renewable Energy More Accessible

As renewable energy becomes more of a priority for U.S. public policy, there is a growing interest in ways to expand the country's electrical generating capacity from sources such as wind and solar power. One of the ways to make this happen is to develop a distributed system where homes and businesses are given incentives to install solar panels and windmills on their property.

However, this approach doesn't completely solve the problem. Even with rebates and tax credits, solar panel systems are still very expensive to buy and construct. Particularly for small businesses and homeowners on a limited budget, it's very difficult to come up with the cash to purchase photovoltaic panels outright.

But there are ways to overcome these obstacles. One of the most promising developments in the energy consumption industry has been the advent of power purchase agreements (PPA), which offer property owners an incentive to have renewable generating sources built on their land or rooftop without the large upfront costs.

A PPA is an arrangement in which an installer agrees to design and build a power source on the property of a buyer. The installer pays for the cost of the system, in exchange for a contract with the buyer that states it will purchase electricity from the system once it is built. This ensures that the installer will secure a consistent revenue stream from their work, while the buyer is able to reap the benefits of renewable energy credits. In the case of solar and wind PPAs, the buyer's local utility company agrees to supply electricity for those times when the system isn't producing energy.

For more information on PPAs and other energy consumption developments, check back with LifeIsGreen.com.

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