Power Purchase Agreements

A lot has been said about the "can't lose" nature of Power Purchase Agreements (PPA's) under which, for example, a chain like Whole Foods will put no money down, let a third party install a Solar PV array on its roof, then pay that party, for example, 85% of the store's normal power bill each month -- for 20 years.  (Source).  The vendor gets a secure income stream, the store's happy paying 15% less for its power and we all win, right?

Not so fast.  What booster articles like this omit is how much subsidization is built into the deal.  Is the PPA vendor getting an inflated Feed In Tariff (FIT) rate?  Is the local utility being forced to buy the power whether it wants it or not (some don't want it because it's too variable and thus grid-reconfiguration costs must be added) and for an open market price?  Is the PPA vendor copping state and/or federal grants, tax credits and other subsidies to build the array?  Such articles never disclose these critical background facts.  The authors want you to believe that it all makes economic sense so why isn't everyone doing it?  

I want the PPA concept to work.  But I don't want utopian mirages, either, and it's poor journalism to author such pieces and not ask obvious questions to uncover obvious, countervailing facts.  When vendors can build me a 10KW array for $10,000 ($1/watt) I'll buy, and so will 100 million other Joe Six Packs like me -- because that would be a great deal (10-year payback cycle on a 30 year system).  But if fellow taxpayers (by paying more taxes to cover my tax credits) or ratepayers (via inflated rates to cover inflated FITS) are subsidizing me, then we simply having government picking Peter's pocket to pay Paul, and we all know how that goes.

I'll be collecting here more PPA research as I find it.  Sure, I want it to work.  But like the subsidy farms criticized here, I want to know the whole story, not a booster-pitched piece of propaganda.