Puerto Rico PPA (power purchase agreements) have become increasingly popular with the island’s soaring electricity rates! However, you’re probably wondering how PPAs work and why more large Puerto Rican businesses are choosing to take advantage of the benefits they offer. Let’s go over the fundamentals of PPAs and the benefits they provide to help you decide if they’re a good fit for your organization.
What Is a PPA?
Fundamentally, a PPA is an agreement between your organization and an independent energy provider for access to solar energy at your facility. Your energy partner designs, installs, and maintains a solar energy system at your facility at no up-front cost to you. In return, you pay a fixed rate for electricity throughout the length of the PPA contract, which usually lasts about 20 years. Almost all PPAs include an escalator, or inflation rate for the electricity purchased that goes up every year.
How Does a PPA Work?
When you enter into a PPA contract, your solar provider owns the solar system. You pay your provider to use the electricity that the solar system generates. Your solar provider performs operations and maintenance (O&M) services to ensure the system runs properly for as long as the PPA contract lasts. However, your provider also receives any solar financing assistance needed to cover the system’s installation costs, including tax credits, net metering programs, and solar incentives.
After learning all these facts about Puerto Rico power purchase agreements, you may wonder “Are solar PPAs a good deal?” Yes, they are a good deal for large commercial solar clients who want to save money on their LUMA electric bills but don’t want to buy a solar system outright.
Benefits of a Puerto Rico PPA
More large organizations throughout Puerto Rico are choosing to take advantage of PPAs because they offer benefits like:
Fixed Electricity Rates
Today’s energy market is plagued by fluctuating costs, making it difficult to budget energy expenses in the long run. With a PPA, you and your energy partner lock in at a fixed electricity rate, so you can more accurately predict energy expenses over the short and long terms. Because you agree to a fixed rate upfront, you don’t have to worry about surprise energy expenses or the financial risk of traditional energy sources.
A Greater Variety of Options
When it comes to traditional energy providers, you only have one choice – LUMA. That makes it difficult to leverage your options and find the best value. With a PPA, you can shop around and find a solar energy partner willing to negotiate the best rates. You’re generally working with a private company to source a PPA, so you don’t have to deal with the limitations of LUMA. Because you have more options to choose from, you can research your options and find the partner that best aligns with your efficiency goals.
A Straightforward Solution
PPAs offer one of the simplest ways to gain access to solar energy in today’s marketplace. A PPA allows you to achieve your energy efficiency goals without having to worry about how solar electricity is delivered to your facility. Your PPA provider oversees every step of designing, building, and maintaining your solar infrastructure, so all you have to worry about is paying your fixed rate.
What Happens When a PPA Ends?
PPAs are most frequently contracted from 15 to 25 years. However, you’re probably wondering what happens when that term is up. When a PPA ends, you generally have three options:
- Re-Negotiate the PPA for a new rate and term.
- Buy the solar energy system at your facility outright from your PPA provider.
- End the partnership, upon which your PPA provider will dismantle the infrastructure they own.
BCSC LLC can procure a Puerto Rico PPA for your organization. Inquire today by calling 310-499-3658 or through the contact us button below!