Explaining PPA Financing

Renewable Financing 101

Job seekers, if you are new to the industry it might be hard wrap your head around how Solar Power deals are structured. One of the common ways commercial, and increasingly residential customers, buy solar power or other renewable power is through something called a Power Purchase Agreement (referred commonly as a PPA). That is to say, they buy the power generated by the solar panels, but they don’t necessarily own the solar panels on their roofs.

There are a several companies out there providing PPAs to commercial customers that you may have heard of: SunEdison, Recurrent Energy, MMA Renewable Ventures, and Tioga Energy. Each have smart finance guys that put together these deals – Tioga Energy’s smart guy is Kristian Hanelt; he’s written a pretty straight forward explanation that will help you understand the economics behind their projects and why they are good for the entity that buys the power and the company that provides it. You can download that report here: http://www.tiogaenergy.com/tioga-reports.php

Don’t get intimidated by the graphs and models, just make sure you understand the concept because these PPAs are critical in bringing renewables into the mainstream.

Hasta pronto!

-Ian Thomson

Skip to toolbar