Dispatchable Power Purchase Agreements and Your Future
But they are going to change.
Utilities no longer look at solar the same way. And you shouldn’t as well.
With the advent of more storage options every day, you and your solar plant will behave differently. No longer will you be pushing power onto the grid, based upon the amount of sunshine or the middle of the day. You will now be working with the utility, like an Independent Power Producer (IPP).
This is why Dispatchable PPA’s will be the future.
The structures of these agreements are evolving. Today they involve the utility (project offtake) to determine when to charge or discharge the storage capacity. You could look at this like when you drive on a highway and there is a toll to be paid. Using the road requires maintenance and it is bidirectional. Also, the utility can decide where to charge the storage from; the solar/renewable energy source or the grid. In California, they put lights on the onramp to allow vehicles on the highway.
You will now be a venture partner of sorts, with the utility.
So, how do these new PPA’s work?
The project offtake would have control as to when the storage/battery is charged and discharged. This would be subject to the terms of the agreement set forth in the PPA contract. This makes the project offtakers role and more active one and be communicating with the utility to understand what their needs are and supporting them to reach those goals. This could be for demand response to meeting their load requirements.
The other future of PPA’s is going to be capacity arrangements. Similar to the description above about dispatchable PPA’s. In a capacity relationship, the availability of the energy in the storage/battery are sold to the project user and the project sponsor has the rights to all other services (energy, frequency response, etc.) that they storage/battery could provide.
The project user would also be obligated to pay a monthly capacity charge to compensate you for the availability of the storage/battery to be used when needed. And with that, they would control the storage/battery for charging and discharging cycles.
This is happening today in markets like Hawaii, California and in other countries. With the recent announcements in Hawaii of PPA rates less than $0.10 per kWh for solar & storage, this is the future.