Power Purchase Agreement Contract Structure for Solar Power Systems

In order to prepare a PPA request for a proposal document, the owner’s legal counsel and management personnel must familiarize themselves with various elements of the contract agreement. Agreements involving third party ownership consist of two parts: legal and technical. The following are some of the most significant points of PPA type contracts that third party purchase providers must respond to and evaluate accordingly:

Contractual matters of interest

• DC output size of the PV modules in kWh
• AC or U.S. Power Test Condition (PTC) output of the photovoltaic modules in kWh
• Expected AC power output of the solar system in its first year of installation
• Expected life cycle power output in kWh DC
• Expected life cycle power output in kWh AC
• Guaranteed minimum annual power output performance in kWh AC
• Terms of contractual agreement
• Penalty or compensation for performance failure
• Price structure at the end of the contract with client paying 0% of the cost
• Price structure at the end of the contract with client paying 50% of the cost
• Price structure at the end of the contract with client paying 100% of the cost
• Expected average yearly performance during life cycle of the contract
• Expected mean yearly performance degradation during life cycle of the contract
• Assumed PPA price per kWh of electrical energy
• Initial cost of power purchase agreement
• PPA yearly escalation cost as a percentage of the initial energy rate
• Net present value over 25 years
• Proposed cost reduction measures
• Net present value of reduction measures
• Annual inflation rate
• Projected annual electricity cost escalation
• First year avoided energy cost savings
• Total life cycle energy saved in kWh
• Total life cycle energy PPA payment
• Cost of PPA buyout at the end of life cycle
• PPA expenses
• Total life cycle pretax savings
• Total project completion time in months
• Customer training
• Insurance rating

Technical matters of interest

• PV module manufacturer and type PV module technology
• PV module efficiency rating
• PV module DC Watts
• PV module PTC Watts as listed under California Energy Commission (CEC) equipment and product qualification listing
• Total PV module count
• Percent yearly solar power output degradation
• PV module warranty in years after formal test acceptance and commissioning
• Inverter make and model as listed under CEC equipment and product qualification
• Inverter kilowatt rating
• Number of inverters used
• Inverter performance efficiency
• Inverter basic and extended warrantees
• Solar power tracking system (if used)
• Tracking system tilt angle in degrees east and west
• Number of solar power tracker assemblies
• Kilowatts of PV modules per tracker
• Ground or pedestal area requirement per 100 kW of tracker; for large solar power farms, tracker footprint must be accounted for in acres per megawatt of land required
• Tracker or support pedestal ground penetration requirements
• Tracker above ground footing height
• Tracker below ground footing height
• Wind shear withstand capability in miles per hour
• Environmental impact during and after system installation (if applicable)
• Lightning protection scheme
• Electrical power conversion and transformation scheme and equipment platform requirements
• Equipment mounting platforms
• Underground or above ground DC or AC conduit installations
• PV module washing options, such as permanent water pressure bibs, automatic sprinklers, or mobile pressure washers
• Service options and maintenance during life cycle of the PPA

Experience in large-scale installation

• Engineering staff’s collective experience in photovoltaic design and power engineering
• In-house or subcontracted engineering
• In-house or subcontracted installation crew
• Years of experience in solar power tracker system type installations (if applicable)
• Years of collective experience in PPA contracting
• Location of management, engineering, installation, and maintenance depots
• Availability of PV modules and specific power purchase agreements with major national and international manufacturers
• Name of the primary entity assuming full contractual responsibility and project bonding
• Names of each contractor or subcontractor taking part in the PPA
• Years of collaboration with outsourced entities
• Data acquisition and monitoring system
• Data acquisition and control system (DACS) certification by the rebate agency, such as the California Solar Initiative (CSI)
• Data acquisition system has a proprietary provider or a third party certified provider?
• DACS power measurement and transmission intervals in minutes
• Monitored data, such as weather, wind speed, humidity, precipitation, and solar irradiance
• CSI certified reporting scheme
• Customer WEB access key
• On site electrical display and printing capability, and associated options
• On site integration capability with customer’s data monitoring system
• Periodic data reporting format and frequency
• Presentation and visual aids, such as bar chart displays of statistical solar power monitored information and solar power array configuration displays
• On demand reporting
• Proactive solar power system diagnostic capability