I had the pleasure of leading a discussion at VERGE about Simplifying Clean Energy Purchase Agreements. Although solar and energy storage have become a very popular way to leverage renewable energy for organizations, there are still a lot of questions on what types of agreements are right for some organizations.

There is not a simple answer to that, however, in my experience of leading enterprise sales at DSD Renewables and working with multi-state organizations such as The Home Depot, Lowe’s, IKEA, Verizon, T-Mobile, and many others, the best path is always to start with your organization’s goals. Some companies have aggressive sustainability/ESG targets, and on-site solar alone will not be enough to reach them. For distributed companies such as T-Mobile, AT&T, and Dollar Tree, the best solution was to become a community solar off-taker on an off-site solar project. For companies like The Home Depot and Lowe’s with their goals to commit to 100% renewable energy by 2030 and net-zero emissions by 2050, respectively, the Power Purchase Agreement was the best path to secure the most predictable amount of savings for the next 20 years and be able to reinvest into other sustainability initiatives to fulfill their goals. For IKEA and Verizon, they had the cash flow and wanted to own their assets, and a cash deal worked in their favor to be able to claim their environmental attributes. However, Power Purchase Agreements can also be structured in a way in which the customer can receive environmental attributes. If a customer’s goals are known in the beginning, and both parties are transparent about their respective needs, then both the business deal and the contracting can be simplified.

The bottom line is, you need to work with a company that will help you understand your options and create a path forward for your organization to meet your goals, whatever they are. My team and I are more than happy to provide your organization with an evaluation of your sites and give you advice on how to proceed. We encourage you to do your research and find partners that align with your goals and take them into consideration when planning your clean energy journey.

If you missed this discussion, but would like to learn more about the agreements available for solar and energy storage, see below:

The pursuit of clean, renewable energy sources is more critical than ever, and one key aspect of this transition is simplifying clean energy purchase agreements. During the table conversations at VERGE, I delved into not only Power Purchase Agreements (PPAs), but also alternative agreements, such as Leases, that offer site owners new revenue streams, as well as community solar where your organization can benefit from clean energy without having to install a single panel on-site as a subscriber.

PPAs have emerged as a standard financial mechanism that empowers property owners to harness the benefits of clean, renewable energy without any capital expense. With a PPA, a solar project developer takes on the responsibility of designing, permitting, financing, installing, and maintaining an on-site solar project. There is no capital expense for the customer and once the project is operational, the customer gets a pay-as-you-go framework.

Under a PPA, customers can enjoy the advantages of clean solar energy at a pre-determined, low rate. As utility rates continue to increase, having a locked cost for energy for 20+ years is a great way to control your capital expenses and guarantee savings. Under this model, the customer benefits from reduced energy costs without the complexities of managing the installation and maintenance of the system. It’s a win-win situation – cost savings and sustainability combined.

In addition to the PPA model, there’s also the option for Direct Purchase PV systems. This approach allows organizations to pay for their solar installations upfront, often referred to as a cash or direct purchase. While this model can be advantageous for certain companies, it does come with a requirement for a separate operation and maintenance agreement to ensure the long-term functionality of the system. It provides greater control and ownership of the solar infrastructure but entails additional responsibilities.

Lease agreements offer another avenue for businesses to tap into the benefits of solar. Under a lease agreement, a customer can host a solar system on their site and, in doing so, can earn revenue by leasing the solar installation area to a solar developer. The energy generated by the project is sent back to the grid, benefiting local businesses and the surrounding community. The solar host can also subscribe as a community solar off-taker, which allows them to receive a portion of the electricity produced on-site and save money on their electric bill. Community solar subscriptions usually vary from a 5-20% discounted rate of the utility price, depending on location, incentives, and additional factors.