Power Purchase Agreements and Energy as a Service, a perfect pair for Hybrid Renewable Power Generation and Storage Projects when capital is scarce.
EaaS+ PPA spells CapEx Relief : The “OPEXcellence Adventure” 🙂 for Hybrid Power
“Behind the Fence” Power Purchase Agreements “PPAs” have been around awhile, especially when there is a power conversion opportunity to convert heat or pressure into electricity, and more recently converting solution natural gas into electricity for private companies, which may use all or some of the power privately for their own operations and where there is a public grid connection allowed by regulators, selling the excess electricity at what ever the current grid price might be when the excess is available.
PPAs are Morphing as Project Equity drys up in Today’s Declining Economy,
Of course large scale Wind, and Solar have been pitched and sold as PPAs “Behind the Fence” into community and industrial/commercial sites for years to secure stable revenue streams from private or public users paying for the power, wher part of the proceeds are used to retire the debt used to create the project and the rest is used to run the maintenance operations and pay out what is left as a dividend to the shareholders of the project. For example with Solar finding its way on to factory, campus and commercial building rooftops, companies small to large in the factory world have been able to reduce their power consumption and either capture public tax credits for using green power, or avoid the bulk of carbon cap taxes while reducing their CO2 output or “CO2 footprint”.
Equity Markets for Power Projects are Drying up…enter Vendor Underwriting
What is different in today’s equity strapped investment environment is everyone’s desire to convert every next business venture designed to save costs or generate new or incremental revenue into an “OPEX” Operating Expense, so this means the emphasis in a bankable project is more about the efficiency of the power generation facility to guarantee the savings to the end user, and the ability to generate additional margins in the end user business so they can afford to retire the debt incurred. The generation efficiency of the overall system ability to qualify the end user’s ability to cover the payments, is key to making the project bankable. To keep things going, more and more the makers of equipment elements found in hybrid power generation and energy storage solutions are stepping in to self finance or secure financing of their portion of projects to keep their businesses operational, in the face of what is a real an energy project equity shortage in the Energy Sector.
Size Matters: Balancing Size of Generation, Storage, Use and Site Capabilites
Relative power generation size does matter, as the efficiency of the hybrid power generation and storage system and ability to generate a fast return to the investors will depend on balancing the size of different generation types used in the hybrid system versus the size of the different energy storage systems. Getting the right balance of different generation types and energy storage types is a real time effort of monitoring each element and automatically controlling the input, flows and outputs continuously versus what the renewable sources can generate, what the site needs for its own power use and what the grid can offer in terms of buying and selling electricity at any given moment.
Have Roof Space, will Solar? Times are a changing…
Don’t DIY… Do a Hybrid Green EaaS ala PPA
(Is Solar in the Dog House?)
Solar on its own, in a “behind the fence” scenario, where the FIT or local utility contract payout is fair, is still viable, for now, as these subsidies still exist at the state level and you have enough square feet to make the solar only project work, provided the contract guarantees a payout which will service the debt used to purchase or finance the all solar generation facility in the first place (and there is a capacity on a local line still available to connect to the grid). In this case a DIY with assistance from a local installer might be just the way to go. Where “cash strapped” states have reduced the FIT payout or credit for renewable energy projects, the only way forward is to move the entire project into an OPEX, “Operating Expense” Business model.
Where your power needs are “behind the fence”, especially in remote locations, then DIY has more risk, especially if it’s not central to your business or institutions core compentence . Also Solar on its own will probably require a huge foot print for even the most modest power requirement and most certainly require an efficient energy storage mechanism. Wind (Starwind5) on the other hand is at least 2X more efficient than Solar, with the price including installation for small wind heading below US $2.00/Watt, also Small Wind has a very compact physical foot print, and now a days is much easier to couple as a co-generation primary feed to the batteries together with Solar. Ok the downside is more parts and complexity , so now its time to think beyond DIY.
PPAs and EaaS Companies: Hybrid Green is THE Big Future Energy Opportunity
A Quick Power Bill Fix with Long Term Revenue Opportunities…”Behind the Fence”
Entering into a PPA as a business makes sense in the form of Energy as a Service “EaaS” when there is a raw power generation asset at the site that is large enough to be converted into $$$ with as little effort as possible. No pun intended, Enter the PPA, where hybrid EaaS companies offer Energy as a Service “EaaS” usually in the form of Power Generation from renewable sources (Wind and Solar) found at the site blended with energy storage, usually electrical batteries to at a minimum reduce your annual power bill to guaranteed monthly rates, and in certain cases create new revenue streams from raw power generation assets currently unused at the site . Companies offering a Hybrid Green EaaS reduce the risk of having the end user doing all the work needed to convert their raw power generation assets into new revenue streams or power bill cost savings for your company or institution, with little if any hard $$$ investment. Solar has been booming for years in those markets which have offered liberal subsidies to sell electricity back to the grid via a FIT “Feed in Tarrif” or as part of timed sale back to the grid when variable prices are at their best, so it stands to reason as pure solar tariffs and credits wane, the Hybrid Green EaaS deliverd in the form of a private PPA is the way forward.
Solar Subsidies & DoDo birds: the similarities are getting stronger…
OPEX to the rescue..via EaaS PPAs for Hybrid Power Generation & Energy Storage
As Solar Subsidies (FITs and tax credits) decline and eventually disappear at the state level and the cost of installed Solar in the USA approaches US $1.00 installed thanks to companies like Solar City (yet another Elon Musk venture) , it only makes sense to leverage a site’s physical area (field and rooftop space), if the area adds up to big raw solar and wind generation asset wher there is enough power generating capability for a significant portion,that means more than 35%, of the local power needs. As these initially rich FITs are being reduced overtime for new installations, and in some cases being eliminated, and as state governments and federal governments are seeing corporate tax revenues dry up, they now realize the tax payer cannot subsidize such new energy project ventures for ever. Governments at the state and municipal level also have in many cases succumbed to other power generating lobby groups interests driven by the coal, oil & gas and nuclear energy lobbys, who are pushing the “status quo” message in order for them to keep local jobs in place.
So when building “behind the Fence” Generation and Storage to be delivered to end users as a Hybrid Green EaaS PPA, it’s extremely important to consider the erosion of the FIT revenues and reduction of Tax Credits when designing to the solution so the system itself can be easily & cheaply serviced so as to operate without subsidies in the mid term (with in 5 years to be safe). This design apporach without subsidies in 5 years will be necessary in order to hit target “LCOE” Levelized Cost of Energy business goals and make your “Behind the Fence” Power Generation and Energy Storage Facility both profitable and bankable.
The Hybrid Green EaaS PPA driven system design effort is a tall order for any business or institution, even those in the “DIY” Do it Yourself category with the right core competences, and as such, more companies and institutions today are looking to a Hybrid Green EaaS under a under a private Power Purchase Agreement “PPA” as the sensible way forward, so they can stay focused on their core business and activities, and without much effort still reap the benefits of a lower power bill and/or new revenues.
Green EaaS Companies: The New Environmental “White Knights” of PPAs
Self Financed Projects offered by Green Energy EaaS Companies to end users as a PPA convert your raw power assets (rooftop square feet, property square feet, unfettered access to constantly blowing winds, etc…) into new revenue and power bill reductions which are passed on to the end user a guaranteed monthly power rate. EaaS companies design the whole arrangement via PPA “Power Purchase Agreement” which might be 12-24 months in a temporary use situation, where the equipment used might be used on 2 or 3 projects over its useful life before refurbishment, or be made up of one time use equipment installed in a more permanent situation to match up with a building or property lease and the duration of the power need forecasted, or revenue opportunity , where the Hybrid Green EaaS is usually built as a PPA with a term of 5, 10, 15 and even 20 years.
In either case, the Green Energy EaaS company takes care of all the site design, build, activate, use, operate, maintain, expansion and retirement details as part of the PPA, and the end user enjoys the price protection afforded in the reduction of their power bill over the period contracted, and in cases where the site has more raw power assets than needed, the site can be developed to provide power to other private neighbours and/or the power grid to create a lasting revenue stream for the end user.
Better yet, when an EaaS company like www.esolar.ca builds their power generation and energy systems systems based on hybrid renewable power using Solar and Wind like www.mobisun.ca and Starwind5, and uses clean energy storage like next generation Li-Polymer Batteries or Zinc Air batteries, the whole earth benefits in a big way, and in Starwind5’s opinion this is the best way forward for everyone and that is, Green EaaS Companies delivering more overall value to all parties via Green PPAs. 🙂