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Putting a Solar Power Purchase Agreement to Work

November 27, 2013 | 0 comments

If solar is being considered as a green power option for your commercial building, don’t assume you have to install rooftop photovoltaics or invest in other solar power infrastructure.

By participating in a solar power purchase agreement (SPPA), you can reap the benefits of solar power while saving on upfront capital costs and avoiding concerns about system performance or maintenance. Here’s how an SPPA works …

A third-party developer (a solar services provider) agrees to own, operate, and maintain a photovoltaic system on your building’s roof or somewhere else on your property. In return, you – the building owner – purchase the PV system’s electric output from the solar services provider (typically at a lower price than the retail electric rate of the local utility service provider).

By buying the solar power without having to invest in the photovoltaic system itself, building owners and facilities managers can steer clear of the typical cost and installation barriers associated with solar power. In simple terms, an SPPA allows a property owner or manager to pay for the solar power they use without having to pay for the solar panels or system infrastructure to generate it.

Because you don’t own the photovoltaic system, you don’t lose sleep over system design and installation, photovoltaic performance, or maintenance. It’s a win for solar services providers as well, who avoid added costs of the land ownership necessary for photovoltaics and also benefit from tax credits and income from selling solar power.

According to the Solar Energy Industries Association, there can be additional costs to building owners who decide to host a photovoltaic system, including possible property tax increases and necessary building upgrades to support the solar PV system. For example, building owners are responsible for the roof repairs necessary to sustain a roof-mounted system; if the system is located elsewhere, building owners may need to regularly trim trees or bushes that shade the photovoltaic panels.

SPPAs aren’t currently authorized in every state, although almost half the country allows for third-party solar photovoltaic purchase power agreements. See whether SPPAs are authorized in your state.

If your state allows SPPAs, have you investigated them as an option? Why or why not?

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