WHAT IS A POWER PURCHASE AGREEMENT?
A Power Purchase Agreement (PPA) is an arrangement in which a third-party developer installs, owns, and operates an energy system on a customer’s property. The customer then purchases the system's electric output for a predetermined period. A PPA allows the customer to receive stable and often low-cost electricity with no upfront cost, while also enabling the owner of the system to take advantage of tax credits and receive income from the sale of electricity. For a more complete description of PPAs, how they are structured and what organizations are well suited for their use, please go here: US DOE website.

WHAT IS A SOLAR LEASE AGREEMENT?
A Solar Lease Agreement, sometimes called an Energy Services Agreement (ESA), differs from a PPA in that the host pays a fixed, monthly amount for the use of the solar system rather than paying for the power directly. The solar system is still owned by a third party and the tax benefits also flow to the owner. A solar lease can be a preferred finance structure for hosts that prefer to have uniform monthly costs or in jurisdictions in which PPAs are not allowed.

WHAT IS NET METERING?
Net energy metering (NEM), commonly referred to as net metering, is a metering and billing arrangement designed to compensate distributed energy generation (DG) system owners for any generation that is exported to the utility grid.

NEM allows utility customers with on-site DG to offset the electricity they draw from the grid throughout the billing cycle (e.g., one month). The utility customer pays for the net energy consumed from the utility grid.

NEM customers directly use the electricity generated on-site by their DG systems. If the amount of electricity the NEM customer’s DG system produces exceeds the amount of electricity that customer can use, the excess amount is exported to the utility’s electric grid. If the NEM customer uses more electricity than the DG system produces, the customer imports electricity from the grid, and pays the full retail rate for that electricity, just like a traditional utility customer.

The NEM customer is typically compensated for excess electricity that is exported to the grid by the utility on a per kilowatt-hour (kWh) basis. The level of compensation varies by location depending on the state and local policies in place. In some locations, utilities may compensate NEM customers for excess generation at the full retail rate, or some amount less than retail. In certain cases, compensation levels may be zero. At the end of the billing cycle (e.g., monthly), the NEM customer’s charges for energy imported and credits for energy exported are netted against one another. If the amount of electricity a customer imports exceeds the amount exported from the DG system, the difference is billed to the customer. If exports exceed imports during a billing cycle, typically the NEM customer can carry the balance forward into future billing cycles (i.e., a rollover credit). Again, depending on the policies in place, this balance can either be carried forward indefinitely, or it might expire at some fixed point in time (e.g., at the end of the calendar year).

For additional information about NEM, how it is changing and what restrictions are being placed on it, visit this NREL website .

HOW DO I GET PAID FOR ELECTRICITY WITH NET METERING?
Net metering credits your account the difference between what the system returns to the grid vs what you use from the grid. In most cases, energy is charged and credited at the same retail rate for both.  If you return more that you use you are credited with Net Excess Generation (NEG). NEG credits do not have an expiration date.  Current retail rate is about 12 cents per kwh. A sample netmetering bill from Cherryland is here.

HOW LONG DO SOLAR PV SYSTEMS LAST?
The panels last at least 25 years, probably over 35 years. The inverters last from 10-20 years. Then they can be refurbished or replaced. Replacement cost is $0.20 to $0.25 per watt for inverters.  Solar panel output deteriorates about 1/2 percent per year in northern climates. Racking components are aluminum, stainless steel, and galvanized steel. Some ground array structural components may be pressure treated wood.

WHAT ABOUT SNOW IN THE WINTER?
It depends on the panel tilt and local conditions. Areas exposed to wind with tilt angles 45 degrees or greater will shed most snow. Other systems will require an occasional brush-off for maximum output.  Only about 15% of annual solar production is during the snow periods and snow will only cover panels for a fraction of those days.  A tracking array "dumps" snow every morning before beginning its tracking routine.

WHAT ARE SRECs?
A renewable energy certificate (REC) is a market-based instrument that represents the property rights to the environmental, social, and other non-power attributes of renewable electricity generation. Solar RECs (SRECs) are created for each megawatt-hour of electricity generated from solar energy systems. The ultimate owner of the SREC owns the "solar-ness" of the power.

In a PPA or Solar Lease financing structure, the SRECs are generally claimed by the solar system owner to reduce the PPA rate or lease payment charged to the host. However, if it is important for organizational mandate reasons for the host to retain the SRECs, that can be accommodated.

Many states create SREC markets to spur the development of solar by requiring electricity suppliers to purchase SRECs produced by in-state solar systems as part of their obligation under the state’s Renewable Portfolio Standard (RPS). Not all states use the SREC acronym but achieve the same goals with their own program. Additionally, some SREC markets allow corporations to purchase SRECs to off-set their own carbon usage. This solar-specific requirement to meet a portion of the RPS with solar resources is often referred to as a “solar carve out.” Through the purchase of the SRECs, electricity suppliers are ensuring that their products meet the RPS-mandated amount of solar power. The monetary value of an SREC in these state markets may be determined by supply and demand, with demand largely driven by electricity suppliers needing to meet their solar RPS requirement or pay a compliance premium or it may be a fixed price set by the state.

Homeowners and businesses hosting solar systems in states with SREC markets are able to reduce their costs of electricity by selling the SRECs associated with their systems’ output into the SREC market. However, by doing so, homeowners and businesses preclude themselves from making solar power “use” claims or claims on reducing their carbon footprint. For more on claims, visit the Solar Power Use Claims Guidance webpage.

This EPA webpage lists resources to help you understand how state SREC markets work, which states have SREC markets, and how SRECs may impact your project development.

WHAT IS THE DIRECT PAY OPTION IN THE INFLATION REDUCTION ACT?
The Inflation Reduction Act of 2022 (IRA) includes a provision for the Treasury Dept to make a direct payment of the value of the Investment Tax Credit for a solar project owned by state and local governments, non-profit organizations and certain other entities. While this may be beneficial in certain situations, there are two significant deficiencies in the program for most school systems and non-profits. First, it is only the ITC value that is paid; the tax benefits of depreciation of the solar system is not transferred. This effectively raises the cost of the solar system by 21% vs third party ownership. Second, the direct payment is made only after construction and commissioning is complete. Since this is a new program, the length of time for this payment delay is unknown but will definitely require interim financing by the host organization.

HOW BIG IS A SOLAR ARRAY?
For every 1000 DC watts, there are about 75 square feet of panels. So a 10 kw array will be about 750 square ft (20 x 38 ft) 

HOW MUCH SPACE DO I NEED FOR A LARGE SOLAR SYSTEM?
In general 4-5 acres is required per megawatt.

WILL A SOLAR ARRAY PRODUCE ELECTRICITY DURING A POWER OUTAGE?
No. Most systems have a rapid shutdown to avoid sending electricity to the utility distribution system, and therefore a dangerous matter for linemen. However, an Automatic Transfer Switch (ATF) can be installed with your solar system allowing itself to isolate from the grid and directly power your facility while the sun is shining.

WHAT ABOUT SHADING AND SHADOWS?
We evaluate each site using the Solar Pathfinder system. This allows us to determine any losses in production due to shadows.

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