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U.S. Department of Energy Energy Efficiency and Renewable Energy

On-Site Renewable Power Purchase Agreements

At a Glance
Power purchase agreements feature a variety of benefits and considerations for Federal agencies, including:

Benefits:

  • No up-front capital costs
  • Ability to monetize tax incentives
  • Typically a known, long-term energy price
  • No operations and maintenance responsibilities
  • Minimal risk to the agency

Considerations:

  • Federal sector experience with PPAs is still growing
  • Contract term limitations
  • Inherent transaction costs
  • Challenges with site access contracts and concerns

On-site renewable power purchase agreements (PPAs) allow Federal agencies to fund on-site renewable energy projects with no up-front capital costs incurred.

With a PPA, a developer installs a renewable energy system on agency property under an agreement that the agency will purchase the power generated by the system. The agency pays for the system through these power payments over the life of the contract. After installation, the developer owns, operates, and maintains the system for the life of the contract.

FEMP developed an introductory guide to PPAsPDF for Federal on-site renewable projects.

The U.S. Department of Energy (DOE) issued a PPA request for information (RFI) on March 2, 2011. The RFI identified PPA project barriers and requested input from the private sector regarding how to best address these barriers. FEMP received responses on April 11, 2011, and compiled a summary of the responses. A Federal Utility Partnership Working Group (FUPWG) presentation further outlines the RFI.

Project Information

FEMP outlines the power purchase agreement process in its Alternative Finance Options (AFO) webinar. An on-demand recording of the training is available. An updated version of the PPA portion of this presentation is available, featuring typical PPA processes, benefits, challenges, and several case studies.

Another webinar, Regulatory Considerations for Developing Distributed Generation Projects, explains the regulatory implications involved in designing business models for on-site renewable PPAs. Watch the webinar or view the presentation to learn about distributed-generation projects to maximize access to government incentives and potential value streams, minimize regulatory burdens, and provide solutions that will satisfy all parties involved.

Additionally, FEMP's Introduction to Renewable Energy Project Finance Structures webinar explains the most common financing structures used by project developers and their investors (such as sale leaseback, partnership flip, and inverted lease), as well as motivations underlying the choice of structures developers prefer to use. View the presentation.

For upcoming training opportunities, visit the FEMP events calendar.

Several PPA sample documents are also available. They include sample requests for proposal, contracts, land use agreements, case studies, and more.

Project Assistance

FEMP offers technical assistance to Federal agencies interested in implementing PPA projects through renewable energy experts at the National Renewable Energy Laboratory (NREL) and other DOE national laboratories.

These experts often facilitate cooperation between a Federal agency and the Western Area Power Administration (Western) or DLA-Energy. DLA-Energy features a Renewable Energy Initiatives team, while Western has authority to sign longer-term contracts for Federal agencies in its service territory.

For additional information, contact:

Tracy Logan
Federal Energy Management Program
202-586-9973
tracy.logan@ee.doe.gov

Chandra Shah
National Renewable Energy Laboratory
303-384-7557
chandra.shah@nrel.gov

Gerald Robinson
Lawrence Berkeley National Laboratory
510-486-5769
gtrobinson@lbl.gov