Power Purchase Agreement

Solar PV Development in Centre County

A 11-member intergovernmental working group is investigating and pursuing an aggregated power purchase agreement (PPA) that is expected to result in the building of a 22MW solar array in Centre County. The objective of the group is to obtain the lowest cost of alternative source electricity with the option to purchase renewable energy credits to meet carbon reduction goals at the individual organization level.

 

January 17, 2024 Power Purchase Agreement Workshop

 

 Why pursue a PPA?

  • By pooling our electricity together, it creates a better economy of scale.
  • Rates proposed are cost competitive with current power prices and are very likely to beat future energy prices.
  • Locking in low energy prices for 15 years can reduce the risk of market fluctuations.
  • Some members have clean energy goals, and this will help to achieve those goals.

 

Project Process:

Project Overview:

  • In 2020 the 15-member Group signed a Cost Sharing Agreement that defined how to pay for services for an energy services consultant that would assist the group explore the viability of investing in a joint SPPA.
  • In 2021 the Group hired GreenSky Development Group to provide technical and financial advice and to facilitate the development of Requests for Information, Requests for Proposal, and any power purchase agreement(s) the governmental entities pursue.
  • In 2022 the Group received 9 project proposals for a Solar Power Purchase Agreement (SPPA) to purchase grid connected solar. The Group evaluated the proposals and interviewed developers to narrow the selection down to two solar developers. The solar projects are all planned to be built in Pennsylvania.
  • In 2023 the Group has narrowed the selection down to one solar developer who has 4 potential solar projects. Contracts with the solar developer and retail services provider have been reviewed by consultant and solicitor. They are expected to be finalized by the end of 2023 and approved in the 1st quarter of 2024.
  • In 2023 three members withdrew so the working group now consists of 12 entities. CATA and Halfmoon Township withdrew in the spring of 2023 when initial commitments were required. CCRRA withdrew in the fall of 2023 because they are pursuing the installation of solar on the roofs of their properties to cover 100% of their electricity needs.

What is a PPA?

Our Power Purchase Agreement (SPPA) is a financial arrangement in which a third-party developer owns, operates, and maintains the photovoltaic (PV) system. The customer - in this case an intergovernmental group - enters into a contract with a developer to purchase a system's electric output at a predetermined rate and time period, generally 15-25 years.

The Working Group is looking at a 15-year contract with a solar developer who will build a ~20MW solar array in Centre County. The group will purchase solar energy through our PPA but sell the PA compliance RECs to another party to meet our fiduciary responsibilities. The solar system will be helping to green the grid in PA. Several members will purchase e-RECs so they have zero Scope 2 emissions for their GHG emissions inventory to meet their clean energy goals.

 

Why are we investigating a PPA?

It is recognized that our municipalities, school district and local authorities have explicit fiduciary goals and requirements, and some have environmental and climate-related goals. By aggregating our electricity demand we have created an economy of scale for a solar purchase that is cost competitive with current power prices and likely beat future energy prices as fossil fuel sources become more volatile and subject to carbon taxes, fees, or cap and trade systems, all of which are on state and federal legislative or regulator agendas. 

Penn State University has been a leader for the region by entering into a 25 year Solar PPA (Power Purchase Agreement) with Lightsource BP in 2019. This 70 MW project is a utility-scale ground mounted solar array that will provide 25% of Penn State's state-wide electricity requirements. The project is expected to provide cost savings of $14M over the 25 year term of the PPA.