Archive for the ‘Power Purchase Agreement (PPA)’ Category

The Massachusetts Clean Energy Center in conjunction with the Massachusetts Department of Energy Resources has announced the 10 communities that will participate in Round 1 of the 2013 Solarize Mass program. The Solarize Mass program is designed to increase the adoption of solar and drive down the overall cost through widespread participation. The more people in a particular community who participate, the greater the savings for everyone in that community.

The following cities and towns are participating in Round 1 of the 2013 Solarize Mass program: Bourne, Brookline, Carlisle, Chelmsford, Lee, Medford, Medway, Newton, Northampton, and Williamstown; with Carlisle and Chelmsford participating as a group.

In the 2012 rounds of Solarize Mass, 17 communities participated with nearly 750 residents and businesses signing contracts to install solar PV systems for a combined capacity of 4.8 megawatts (MW). Last year participants saved an average of 20 percent when compared to the statewide average cost of installing solar PV, all while creating 32 new jobs. Due to state incentive programs, such as Solarize Mass, installed costs of residential solar PV dropped by more than a quarter in 2012; helping the state reach its goal of achieving 250 MW of solar PV by 2017, with 243 MW installed to date.

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On June 15th, the Massachusetts Department of Energy Resources (DOER) will be holding its Clean Energy Connections event at the Conference Center at Massasoit Community College in Brockton. Through this event, DOER seeks to learn from clean energy project implementers about their experiences, their leadership role in this growing sector, and areas where DOER and other clean energy stakeholders can help maintain the momentum in clean energy investment in the Commonwealth.

The agenda for this event can be found here. Registration begins at 8:30 a.m.

DOER is encouraging attendance for the entire day to ensure an engaging and fruitful dialogue in the morning roundtable discussions and in the afternoon interactive workshop sessions.  

The Conference Center at Massasoit is located at 770 Crescent Street (Route 27) in Brockton – on the Whitman line – and is accessible from Routes 3 and 24.  There is ample free parking and nearby accommodations for overnight guests.

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The Department of Energy Resources (DOER) has published a new resource for those seeking to learn more about solar PV on landfills. This publication, The Guide to Developing Solar Photovoltaics at Massachusetts Landfills, is a 40-page guide intended to  help local officials identify, evaluate, and pursue opportunities to use undeveloped landfill space to generate electricity. The guidebook speaks to the physical requirements of PV systems, project economics, landfill considerations, procurement details, and the PV development process.

For The Guide to Developing Solar Photovoltaics at Massachusetts Landfills, click here.

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The Northeast Sustainable Energy Association (NESEA) and Renewable Sales held a Building Energy-caliber session at Renewable Sales’ showroom at 35 Jeffrey Avenue in Holliston, MA on February 16, 2012.

The evening featured networking in the Renewable Sales showroom followed by a discussion facilitated by The Cadmus Group about Massachusetts municipal solar PPA projects. Meg Lusardi, Director of the Green Communities Division of the Department of Energy Resources (DOER), spoke to the Department’s support for community scale renewable energy and outlined DOER resources available to Massachusetts municipalities. The panel featured case studies from the City of Medford and Town of Natick –two of the communities that receive technical assistance services from Cadmus. Cadmus spoke to best practices and lessons learned from our efforts working with local cities and towns on their renewable energy projects. We also reviewed how developers and vendors can apply these lessons when doing business with Massachusetts cities and towns.

Read more about the February NESEA/Renewable Sales event at Medford’s blog, The Medford Patch

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Cadmus staff presented key challenges and best practices for community renewable energy projects at the MMA annual conference and trade show on January 20th. In a panel entitled “Making Money While the Sun Shines,” Cadmus answered specific questions from community representatives about current or planned solar PV projects.

If your community has lingering questions about solar PV or solar Power Purchase Agreements (PPAs), the slides presented at this panel may be a great resource. A copy of the slides can be downloaded here: Cadmus_MMA 2012 Annual Conf_011912

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In a typical solar power purchase agreement (PPA), a community hosts solar PV on public rooftops or land and enters into a long-term contract for the purchase of electricity from the PV system(s). This third-party ownership model is the most common way in which Massachusetts communities procure solar PV systems (as opposed to outright ownership, for example).  While 2010 and 2011 saw a significant number of public solar PPA projects in the state, interest from solar developers has slowed in recent months. As a result, those communities just releasing RFPs for their solar project or reviewing bids from a recent solicitation may not see as many responses or as attractive prices as their predecessors, leaving many to wonder –what is going on in the Massachusetts community solar market?

Concern over Renewable Energy Incentives

Solar Renewable Energy Credits (SRECs) generated by PV systems (which communities typically give over to solar developers in PPAs) are an important revenue stream in a developer’s financial model for a PV project. Due to recent analyses of and concerns about the state’s SREC market, some developers are struggling to secure SREC contracts at sufficient prices. Without adequate SREC contracts, developers cannot offer attractive PPA rates to communities. Many solar developers active in Massachusetts have slowed or stopped activity in the state.

What does that mean for my community’s hopes for a solar PPA project?

Some developers and analysts believe that Massachusetts SREC prices will recover in six to nine months and that the pace of development will pick up again at this time. In the interim, communities may not see as much interest from the development community or receive attractive PPA rates (e.g., less than 10 cents) on proposed projects.

In order to take advantage of federal incentives that apply to solar projects developed in 2012, community solar project teams should use this period to prepare for a summer 2012 RFP (or RFQ) release, should the SREC market turn around at that time. Proactive teams can use online tools such as the National Renewable Energy Lab’s In My Backyard tool or PVWatts for preliminary resource assessments and to narrow down potential project sites. Using the results of these analyses, as well as details about the sites, solar project teams should begin preparing language for a RFP or RFQ. If more detailed site assessments are conducted, finding should also be included in the RFP.

If and when Massachusetts SREC market projections improve, the most proactive project teams will be first in line to do business with an eager solar industry.

What if we are currently negotiating a solar PPA?

Local officials and staff in Massachusetts are constantly contacted by interested solar developers. If your community is executing a PPA project at this time, be sure to get as much information as possible as possible about the SREC assumptions used in the developer’s financial model for your project. If a developer assumes more than $285 per megawatt-hour (28.5 cents per kilowatt-hour) for 10 years worth of SRECs, tread cautiously. Make sure that your PPA does not contain, for example, a “Change in Law” provision that allows the developer to renegotiate the PPA price with you during the contract term if their SREC assumptions do not hold (e.g., if the assumptions about SRECs used to price your project were out of date or overly optimistic). Also, if the solar developer will use SREC brokers to sell the SRECs from your project, encourage them to get regular updates from their brokers on available SREC contracts.


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When planning a ground mounted PV system (vs. a roof mount), there are several environmental considerations to evaluate prior to entering a PPA.  The overall size of system, landfill or Brownfield location options, wetland areas, and endangered species are all issues to assess when evaluating sites for PV arrays.  While the solar developer’s engineering team typically has the resources to complete all required environmental permitting, a savvy property owner or municipal committee will want to know “fatal flaws” and/or anticipated permit requirements in advance of committing to the project. Understanding potential environmental challenges ahead of time allows for realistic cost and project timeline planning. The site owner should also confirm that the solar developer has a qualified and experienced permitting team on board.

Site Characteristics

As part of a fatal flaws or feasibility analysis, site characteristics should always be considered. Site characteristics that should always be included in any analysis include ground slope, topographic features, access to the site, path to potential interconnection point(s), existing vegetation, erosion potential and soil type. Analysis of environmental features along possible interconnection routes should be considered in addition to the array site itself.

Local Requirements

Do some research on property boundaries and easements, available mapping (wetlands, topographic, utility, endangered species), local by-laws (zoning, planning, and conservation).  Information obtained from the local conservation office, Town or City Engineer, or zoning office can be included in an RFP or made available for review prior to bid.

 State Requirements

A state environmental review (ie. Massachusetts Environmental Policy Act http://www.env.state.ma.us/mepa/ (MEPA)) may be required if the project meets a State’s “threshold” for review.  State thresholds should be checked to see if any project characteristics exceed the threshold.  If they do, a regulatory review may be required and possibly add 30-60 days minimum to the project timeline.  Most states maintain a free online database of environmental resources/protected areas, historic resources and hazardous waste or Brownfields sites.

For example, if the site is a landfill, the landfill must be closed, capped and in full compliance with State regulations.  A Post-Closure landfill use permit is likely required.  Talk to your state Department of Environmental Protection (ie. NHDES, MADEP).  Permits for post-closure landfill use can take 2-6 months.

Federal Requirements

A federal environmental review (National Environmental Policy Act http://www.epa.gov/oecaerth/basics/nepa.html (NEPA)) may be required if federal money is involved or if the project meets a federal threshold for review. As with state regulations, if any project characteristics exceed federal thresholds, they may trigger a regulatory review that will add to the project timeline.

Any site with over one acre of total land disturbance requires a National Pollutant Discharge Elimination System (NPDES) permit for erosion andstormwater pollution prevention. Easier than it sounds, this is a simple document that can be filed electronically and does not delay a project. Best practices, such as using silt fences or haybales around any open excavated areas, should be utilized.

Drafting a Request For Proposals (RFP)

Give the solar developer as much relevant information from your research as possible in the RFP, or provide a list of available resources to examine.  The more information the bidder has about environmental considerations, the more competitive and accurate the bid outcome can be.


An owner’s agent can assist in identifying potential feasibility issues and evaluate proposals for a PV system.   Factors to evaluate for a ground mounted system are different from a roof mounted system and include environmental considerations.  Proper planning and knowing what to expect help make the bid and project phases go smoothly.



Guest Blogger:            Maureen Sakakeeny, P.E., LEED AP


SAK Environmental


About SAK Environmental LLC:

SAK Environmental specializes in environmental permitting and compliance, sustainable development, and Brownfields assessment and remediation, and environmental support during construction, throughout Massachusetts and Southern New Hampshire.  Our goal is to deliver technically sound advice and practical solutions enabling our clients to carry out their initiatives with confidence and peace of mind.  We strive to promote sustainable development and environmentally compatible business practices to allow business, industry and community to thrive. SAK Environmental is a privately owned environmental consulting business founded in 2003 and based in North Andover, Massachusetts.   For more information about SAK Environmental LLC, please visit www.sakenvironmental.com.


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Power Purchase Agreements (PPAs) are appealing to cities and towns for several reasons, and frequently because they require no upfront investment by the community. Rather, cost to the community (in addition to non-price factors) is the per kilowatt-hour (kWh) rate for electricity generated by the renewable energy system –the PPA rate. Different developers may propose significantly different PPA rates when responding to the same solicitation. However, PPA rates proposed that are noticeably lower than other bids received may be too good to be true. Inappropriate pricing can compromise the economic viability of these projects and increase risk to the community.

This diagram shows the relationship between parties in a typical, community-scale solar PPA in Massachusetts. Not all PPAs are structured in this manner.

When considering PPA price proposals, it is important to consider both the cost in cents per kilowatt-hour and how financeable the project is at the given PPA rate. PPA projects with PPA rate that is too low may suffer from significant delays as the developer seeks financing from financing parties looking for some return on their investment. Such delays and false starts waste the significant time investments that proponents make to introduce renewable generation in their communities.  In addition to lost momentum, incentives and other benefits (e.g., 30% U.S. Treasury Grant) that may be critical to a project’s economics may expire while the developer seeks financing.  Ultimately, if the developer is unable to secure financing, the project will likely fall apart.

 When examining PPA rates in cents per kilowatt-hour, bid evaluation teams should weigh the benefits of low PPA rates with potential risks:

  • Extremely low PPA rates and subsequent narrow margins can prevent conservative lenders from investing in the project.
  • In contract years 11 and beyond, the PPA rate should be high enough to fund operations and maintenance costs. That is, the PPA provider should have a financial incentive to continue to operate and maintain your system. PPA rates less than $0.02/kWh in years 11-20 should be considered cautiously.  If your community entered into such a contract, and the PPA provider abandoned the system, would your community be able to fund maintenance or decommissioning costs?

Low PPA rates may be workable in the context of large projects that will generate significant revenue for the developer, for example, through solar electricity sales to the community and SRECs. However, small and moderately sized projects –especially those with relatively high installed costs (e.g., lengthy interconnection runs, tree stumping required), may not be financeable at a low PPA rate.

Finally, many PPAs contain language that allows for developers to exit the contract prior to commercial operation if they are unable to find financing. Therefore, selecting a PPA rate that makes financial sense to your community, the developer, and their financing partners is important to helping all parties efficiently realize the benefits of renewable energy.

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