15-0319 v2.X Power Purchase Agreements

Question:

We are currently looking at a few different ways to fund the solar PV system for the project. One of the options is to engage in a Power Purchase Agreement (PPA). There is a solar contractor in Las Vegas who offers the building owners all products and installation of the system for zero first cost (in return, the contractors will receive the 30% federal tax credit and a 5- year accelerated depreciation on the products). The building owners will pay a fixed rate for the power for 5 years before becoming full owners of the system. Since it is not necessarily considered a lease agreement, and does not meet the minimum requirement of a 15-year lease, we are wondering if and how this approach can be accepted as a exception for us to achieve the imperative.

Answer:

This is an acceptable strategy since the third-party financing arrangement results in the project owning the array outright. In addition to Basic Documentation, the project must provide I06-c Technical Documents, such as a contract, confirming the project owner will own the PV system. See the v3.0 Energy Petal Handbook (EnPH p. 15-17).


Post ID 2754

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