In a recent study, the Gartner Group defines the PPA financing instrument as a major solar driver and predicts 2.3GW of PPA financed solar by 2013. PPA deals can take several weeks of legal review and contract negotiations. Utilizing the SolarTech standard PPA templates can substantially reduce the legal review time, minimizing associated legal costs and shortening the negotiation timeline.
"The use of an industry accepted form should reduce negotiating time by 50-75%" said Ed Feo, Senior Partner, Milbank, Tweed, Hadley and McCloy LLP. "We see a lot of PPA deals come through our office. Many of the terms are similar and yet are still negotiated in every transaction. It is far more cost effective for solar integrators to focus on 20% of the terms that differ from deal to deal, than to rewrite standard material." explains Feo.
The effort was led by SolarTech's Finance Committee comprised of SolarTech members from solar financing, project developers and legal firms. The committee enjoyed extensive legal support donated by two leading legal firms: Milbank, Tweed, Hadley and McCloy LLP and Paul, Hastings, Janofsky & Walker LLP.
"Using a standard PPA form with the credibility of a well known association like SolarTech lends legitimacy to the agreement," said William DeGrandis, Partner, Paul, Hastings. "We will endorse the use of this template with our clients as a means to substantially reduce negotiation time and enhance the cost effectiveness of solar energy projects. I look forward to working with SolarTech to make standardized legal instruments an industry norm," states DeGrandis.
"The industry needs achieve a 15% annual reduction in end-to-end cycle time by 2013 if California is to meet the 2017 goals of the California Solar Initiative," said Doug Payne, Executive Director, SolarTech. "SolarTech was formed to optimize the delivery of PV systems for the benefit of California energy customers. We are pleased to introduce these important tools at Solar Power International 2009."
Looking forward to 2010, the templates being introduced today will be vetted at SPI2009 through the Execution & Implementation Track, led by SolarTech. Several varieties of templates could emerge to meet the specific needs of individual states or markets.
The effort was funded in part by a grant from the California Energy Commission. The grant's overarching objective is to develop and promote best practices for commercial and residential solar markets. Defining innovative financial models and market mechanisms that support grid parity for solar photovoltaics are fundamental to the grant's goals. Specific SolarTech targets within this Energy Commission PIER grant include the following:
- Contribute to lowering the balance of system costs as a percent of the current $9/Watt-peak (Wp) system costs to the projected $5/Wp system costs.
- Reduce the end-to-end PV installation time from the current 25 to 50 weeks to 9 weeks by 2013.
The PPA and Site Lease agreement contract templates will be available for download from SolarTech's web site shortly after the "System Financing: Optimizing Financing Methods and PV Economics" session on Wednesday at Solar Power International.