by Mikayla Heiss
Solar energy is a rapidly growing industry with an average growth rate of almost 50% over the last decade. Large-scale projects require a lot of space and sun. When picturing large solar farms, Massachusetts probably won’t come to mind; it simply can’t compare to the sunny, wide-open Southwest (even though MA is a leader in solar energy). But three Massachusetts groups found a way to green their organizations using a solar farm spanning over 600 acres. The key: Power Purchase Agreements.
The EPA ranks Power Purchase Agreements (PPAs) as one of the most complex ways to get green power and with good reason. The group purchasing power doesn’t actually own or maintain the power source, such as a solar farm. Instead, they team up with an experienced solar farm owner. The two parties develop a fixed price for buying electricity. When in different locations, the owner and purchaser minimize the financial risks of varying electricity prices. If electricity prices plummet where the farm is located, the purchaser covers the owner, paying the difference between the fixed and actual selling price. The purchaser receives money if their electricity sold for more than the fixed price. Although the Massachusetts PPA purchasers profited in the beginning, they’ve been covering the difference these past two years due to low electricity prices, according to Pamela Messenger, president of a purchasing organization. Once the farm is operational, Renewable Energy Certificates prove the purchaser is buying green energy. PPAs open up a world of options. The three organizations in Massachusetts lowered their emissions through a farm in North Carolina. Because PPA’s aren’t necessarily restricted by region, organizations can target areas with historically low access to renewable energy or areas better able to support large-scale projects. North Carolina, for example, had a larger (and cheaper) chunk of land available and was a more carbon-intensive grid.
With the solar power purchase, MIT, an organization in the Massachusetts PPA, is able to offset their greenhouse gas emissions. Image Source: Data from MIT.
A PPA helps develop renewable solar projects. The purchaser guarantees a source of income for the developer. This, along with the purchaser’s credit, can aid in securing funding for the project. For all their benefits, PPAs do have some downfalls. It’s easy for a purchaser to partner with a solar farm that is out of sight, out of mind. However, all parties must consider the farm’s impact to those living around the project. The farm should also be strategically placed to maximize access to renewable energy.
The percentage of signed PPAs, including wind and solar, based on owner location (colors correspond to U.S. map). Texas and the Southwest hold the most capacity for PPAs. Image Source: National Renewable Energy Laboratory.
Organizations no longer need to dive into the specifics of solar panel installation to reduce their carbon footprint. The interest in PPAs continues to grow. Between 2017 to 2018, PPA green power sales increased by about 19%. With reduced financial risks and a world of possibilities, PPAs can carry us to a greener future.