Power purchasing agreements – Your questions answered
Thorough maintenance is essential for any solar plant to achieve optimal efficiency and produce as much power as possible.
New Southern Energy recently participated at the Africa Renewables Energy Summit in Cape Town. As a key player in accelerating commercial and industrial (C&I) adoption of solar energy, our goal is to contribute to energy solutions that will help take the continent forward and improve quality of life for all Africans. It was wonderful to see many industry faces and the hardworking people in our industry come together to strategize, synergize and discuss the many ways in which renewable energy can help Africa reach its full potential.
At this summit, I spoke about power purchasing agreements and how these provide a solution to C&I organisations wanting to adopt solar energy without having to fund the construction of a full solar plant.
Power purchasing agreements
To recap, solar energy provides a long-term saving to C&I players. Most solar plants amortize themselves within 5 – 7 years and produce power for 20 – 25 years if built and managed properly, so the numbers work. This has led to the inception of the Power Purchasing Agreement (PPA) model that enables one to enter into an agreement to buy the power produced from the system at a reduced rate to one’s current Eskom or Municipal tariff. The solar system will be constructed on your site (roof, land or dam), providing an affordable clean energy solution at no upfront costs.
This approach is beneficial for organizations seeking the benefits of solar without wishing to invest the upfront capital. Additionally, the operations, maintenance and performance risk of the system is covered under the PPA.
An additional benefit is that the operations and maintenance of the plant also rests with the investor. Various versions of this model are anticipated to enter the market as financing solar is fast becoming a trend. New Southern Energy provides this option to C & I clients, subject to a feasibility study achieving certain requirements.
A few frequently asked questions regarding power purchasing agreements answered:
May power be wheeled through the grid with a power purchasing agreement?
Yes, “wheeling” allows the generator and consumer to be physically separate from each other and allows the consumer’s account to be credited for the amount generated within the time-of-use periods. The grid becomes a virtual means of transferring the energy. There are, however, certain rules that need to be followed and adjustment to the consumer’s billing structure.
What factors affect the power purchasing agreement feasibility study?
A power purchasing agreement feasibility study is an in-depth process undertaken by the New Southern Energy team and incorporates many factors including:
- The space (roof or land available) to build a solar plant and the ownership thereof
- The amount of power used by your site and during which periods of the day
- The tariff structure through which you are currently paying for electricity
- The amount of solar irradiation received annually by the site
- Other technical factors
How long does it take to complete power purchasing agreement feasibility study?
The feasibility study usually takes two weeks to complete but can very depending on the complexity of the site and power consumption data available.
What operations and maintenance is involved in a PPA agreement?
Thorough maintenance is essential for any solar plant to achieve optimal efficiency and produce as much power as possible. This involves keeping the solar panels clean, doing regular technical checks and rectifying any faults swiftly. Since the seller is directly impacted by the amount of energy produced and sold to the seller, power purchase agreements require maximum performance assurance from the seller.
While New Southern Energy offers three levels of operations and maintenance packages to clients, PPA clients automatically qualify for the advanced level package which includes:
- Remote monitoring
- Monthly reporting
- Two preventative maintenance runs per year
- One corrective maintenance run per year
- At least four cleanings year
This also means that you have access to our specialized team of solar operations technicians.
How will one know whether the solar plant is producing power?
Organisations that enjoy solar energy through the PPA model get automatic access to our online monitoring platform, that shows daily, weekly and monthly performance of the plant and is available 24 hours per day. Detailed information such as weather adjusted yield and inverter performance is also included. Additionally, there is no restriction on how many people in your organization may access this platform.
How does invoicing and payment work?
Once the power plant is switched on, you will receive a monthly invoice for the energy generated by the plant, with details or your consumption. You are able to cross reference this with the monitoring platform, for ease.
For more information about New Southern Energy’s solutions, go to www.newsouthernenergy.com
Lee Smith is the Chief Operations Officer of New Southern Energy. He hold a BSc(Eng) in Aeronautical Engineering from Wits and a MSc(Eng) in Sustainable Energy Engineering from UCT. Over the past 12 years he has worked in Technical Asset Management, Owner’s Engineering, Lender’s Technical Advisory and Independent Consultancy in the solar and wind industries.