Power Purchase Agreement (PPA) | Solar Services Agreement (SSA)
A creative commercial solar financing mechanism that takes the form of a contract to purchase solar energy (kWh) or the services to obtain solar energy from the owner of the solar energy system (usually a special purpose entity/LLC) to the consumer of the power (offtaker/customer).
COMPONENTS OF A CONTRACT
Typically a contract is 20-25 years, with the option to buy-out after year 6 (additional terms can apply)
Typically a contract is 20-30 years, with the option to terminate (buy-out) after year 6 (additional terms can apply).
How often the special purpose entity (SPE) will be paid, the penalty for non-payment, dealing with disputes, taxes, etc..
Information on a reasonable timeline and materials expectations for completion of construction.
Amount paid (or rate) for the electricity to be paid by the offtaker/customer to the special purpose entity (SPE)/LLC over the length of the contract. This can often include escalation rates, which match or are less than historical increases in utility electricity rates.
The rate (amount paid) for the electricity to be delivered to the offtaker/customer by the SPE over the length of the contract. This often includes escalation rates, which are usually less than historical increases in utility electricity rates.
This includes size, location, anticipated first-year production, description, modules, inverters, and utility provider.
BENEFITS OF A PPA | SSA
Little to No Upfront Capital
No Performance Risk
No System Expertise Required
No Maintenance Required
No Purchase Required