UCM's investigation of PPA helps city to renegotiate terms.
Rate and Regulatory Consulting
The Full Story - UCM determined that the initial PPA terms virtually guaranteed that savings would not occur.
A city installed solar panels at one of its largest facilities, and agreed to pay for the installation through a 15-year “Power Purchase Agreement” (PPA) with one of the nation’s largest solar companies. However, five years into the project, the city was skeptical that the anticipated savings were being realized and asked UCM to investigate.
UCM found that the solar system was generating about 11% less electricity than forecasted. More importantly, UCM found that the terms of the PPA virtually guaranteed that the system would not produce savings. The initial PPA price was too high because it failed to take into account that the city would continue to incur significant “demand charges” and “customer charges” with the local utility, regardless of how much electricity was generated by the solar panels. Additionally, the annual escalation in the PPA price per kWh was excessive, and meant that the project would yield increasingly worse results the longer the solar panels were left in place.
With UCM’s findings documenting the impropriety of the PPA, the city was able to approach the solar company and renegotiate the terms to make the project worthwhile.