94 Energy Project Financing: Resources and Strategies for SuccessPPA provider to assume all risks and responsibilities of ownership. A PPA
provider will own, operate, maintain, and clean the system for optimal per-
formance. The PPA provider will also have sophisticated real-time monitor-
ing services to verify the system is working properly.
The host customer will run their business as usual, without any con-
cerns about how to best operate the solar power system. At the end of the
PPA term, the system can be purchased by the host at fair market value,
or the PPA can be renewed. Overall, a PPA enables a host customer (and
our world) to benefit from the use of “green” energy, while still receiving
some of the benefits of ownership through lower electricity costs and an
improved public image. It also allows the host customer to spend their
capital budget on a core business instead of on a solar electricity system.
HOW IS IT DIFFERENT FROM OTHER FORMS OF FINANCING?
A PPA is unique because there are zero upfront costs and the host
only pays for the power produced, with no responsibility for maintain-
ing the system. If a system were financed through project financing or a
lease, the host would be required to make payments on the loan regard-
less of the functionality of the system. While solar electricity systems are
not prone to maintenance problems, few businesses want to add solar
Figure 5-1