Accelerating Solar Financing: SolarTech Releases First Industry Standardized PPA Contract

SolarTe

ch announced yesterday that the consortium will unveil the first ever contract template for Power Purchase Agreement (PPA) solar financing at the upcoming Solar Power International 2009 conference in Anaheim on Oct. 28th.

In a recent study, Gartner Group defines the PPA financing instrument as a major solar driver and predicts 2.3GW of PPA financed solar by 2013. PPA deals can take several weeks of legal review and contract negotiations. Utilizing the SolarTech standard PPA templates can substantially reduce the legal review time, minimizing associated legal costs and shortening the negotiation timeline.

“The use of an industry accepted form should reduce negotiating time by 50-75%,” said Ed Feo, Senior Partner, Milbank, Tweed, Hadley and McCloy LLP. “We see a lot of PPA deals come through our office. Many of the terms are similar and yet are still negotiated in every transaction. It is far more cost effective for solar integrators to focus on 20% of the terms that differ from deal to deal, than to rewrite standard material,” explains Feo.

“The industry needs to achieve a 15% annual reduction in end-to-end cycle time by 2013 if California is to meet the 2017 goals of the California Solar Initiative,” said Doug Payne, Executive Director, SolarTech. “SolarTech was formed to optimize the delivery of PV systems for the benefit of California energy consumers. We are pleased to introduce these important tools at Solar Power International 2009.”

The effort was funded in part by a grant from the California Energy Commission. The grant’s overarching objective is to develop and promote best practices for commercial and residential solar markets. Defining innovative financial models and market mechanisms that support grid parity for solar photovoltaics are fundamental to the grant’s goals. Specific SolarTech targets within this Energy Commission PIER grant include the following:

- Contribute to lowering the balance of system costs, as a percent of the current $9/Watt-peak (Wp) system costs to the projected $5/Wp system costs.

- Reduce the end-to-end PV installation time from the current 25 to 50 weeks to 9 weeks by 2013.

The PPA and Site Lease agreement contract templates will be available for download from SolarTech’s web site shortly after the “System Financing: Optimizing Financing Methods and PV Economics” session on Wednesday Oct. 28th at Solar Power International.