How Does That Work?

Power purchase agreements

WHAT IS IT? A power purchase agreements (PPA) is a contract between a generation facility developer and a customer who wants to purchase the energy generated by the facility. The developer finances, owns, operates and is responsible for the facility and the customer pays a price per megawatt hour generated to obtain the rights to the energy and ancillary products such as capacity and renewable energy credits from the facility.

HOW DOES IT WORK? For OPPD, the process typically begins once Resource Planning has determined there is a need for additional resources utilizing renewable technology. Once that determination is made, an RFP (request for proposal) is issued. OPPD reviews the responses and determines which, if any, meet the requirements and fit into OPPD’s portfolio. OPPD and a developer will negotiate and agree to terms of the PPA, at which point the developer will begin engineering and construction of the project. Once the unit comes online, the developer will own the facility and perform maintenance to ensure that the facility generates to the PPA’s specifications.

DOES OPPD HAVE ANY PPA’S NOW? Currently, OPPD utilizes PPAs for the output of five wind farms: Grande Prairie, Prairie Breeze, Flatware, Petersburg, as well as Sholes, which is under construction. Also, OPPD has signed power sales agreements with NPPD for the partial output of five other wind farms. Those farms are Ainsworth, Broken Bow 1, Broken Bow 2, Crofton Bluffs and Elkhorn Ridge. The normal term of OPPD’s PPAs is 20 years.

The new community solar project near Fort Calhoun is under a PPA, with NextEra Energy Resources.