A PPA contract, or power purchase agreement contract, can last a variety of time frames and are commonly 15-20 years. PPAs are commonly used in the renewable energy industry, particularly for solar and wind projects. Like all contracts, PPAs come to an end, and when they do, the energy buyer is faced with a number of options. In this article, we will discuss three options that energy buyers can take after their PPA contract ends.
Read: 2 Types of Power Purchase Agreements (PPAs) Your Corporation Could Benefit From
Option 1: Renew the PPA
One of the most straightforward options for energy buyers is to renew the PPA contract. This typically involves renegotiating the terms of the contract with the energy supplier, such as the price of energy and the length of the contract. Renewing the PPA contract can be a good option for energy buyers who are happy with the performance of the project and want to continue receiving energy from it. Renewing can also be beneficial for the energy supplier, as it provides a predictable source of revenue and allows the supplier to continue operating the project.
Read: What is a Sleeved PPA?
Option 2: Purchase the Project
Another option for energy buyers when a PPA contract expires is to purchase the project outright. This can be a good option for energy buyers who want more control over the project and want to own the assets. Purchasing the project can also be beneficial for the energy supplier, as it allows them to monetize the project and invest in new projects. However, purchasing the project can also be a significant financial undertaking and requires careful consideration of the costs and benefits.
Option 3: Negotiate a Lease-to-Own Agreement
A third option for energy buyers is to negotiate a lease-to-own agreement with the energy supplier. Under this type of agreement, the energy buyer leases the project from the supplier for a specified period of time, with the option to purchase the project at the end of the lease period. This can be a good option for energy buyers who want more control over the project but are not yet ready to purchase it outright. A lease-to-own agreement also allows the energy supplier to monetize the project and invest in new projects, while still maintaining some level of control over the project.
Read: Fixed vs Variable PPAs: What’s the Difference?
Interested in a PPA contract?
When a PPA contract ends, energy buyers have a number of options to consider. The best option will depend on the specific circumstances of the energy buyer and the project. With many advantages and incentives available for your energy project or PPA contract, now is the ideal time to get started. At EnergyLink, our team members are experts in energy project financing and know how to get the best financial setup for your organization. We understand that starting an energy project can seem overwhelming, and with EnergyLink we will handle the tedious parts for you. We have the capability to handle not only the funding phase but also the design and building process.
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