energyware EDUCATION

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Strategic plans help customers meet sustainability requirements while reducing greenhouse gas (GHG) emissions, the usage of natural resources and other environmental impacts.

The EPA has identified targets for reducing GHG emissions and outlines steps to reduce energy, water, waste and the usage of other natural resources.  The EPA has also addressed ways that sustainability can be achieved across all facilities, purchases and operations. Potential goal areas for customers include:

  • Facility energy efficiency
  • Efficiency measures, investment, and performance contracting
  • Renewable energy
  • Water efficiency
  • High performance sustainable buildings
  • Waste Management and Diversion
  • Sustainable acquisition
  • Electronics stewardship
  • GHG Emissions reductions


Customers may consider working towards LEED Platinum certification for existing buildings operations and maintenance.

Customers would need to make an effort to maintain all of its facilities in an efficient and environmentally responsible manner that ensures the wellness and safety of building occupants.

Many facilities around the country are older buildings, with less efficient infrastructures. Some have implemented several strategies to enhance sustainability, including:

  • Conducting retro-commissioning and re-commissioning to improve energy performance
  • Using the most efficient heating, ventilation and air conditioning equipment and lighting
  • Assessing for compliance with ventilation and thermal comfort standards
  • Installing renewable energy systems
  • Replacing plumbing fixtures with higher efficiency models
  • Installing advanced energy and water meters
  • Reducing irrigated landscape areas
  • Retrofitting buildings and landscapes with low impact development features
  • Using integrated pest management techniques
  • Contracting green cleaning services
  • Purchasing environmentally preferable materials
  • Implementing materials reduction, reuse, recycling and composting programs


A Solar Power Purchase Agreement (SPPA) is a financial arrangement in which a third-party developer owns, operates, and maintains the photovoltaic (PV) system, and a host customer agrees to the installation of a PV system on its property and purchases the system’s electric output from the solar services provider for a predetermined period. This financial arrangement allows the host customer to receive stable and often low-cost electricity, while the solar services provider or another party acquires valuable financial benefits, such as tax credits and income generated from the sale of electricity.

With this business model, the host customer buys the services produced by the PV system rather than the PV system itself. This framework is referred to as the “solar services” model, and the developers who offer SPPAs are known as solar services providers. SPPA arrangements enable the host customer to avoid many of the traditional barriers to the installation of on-site solar systems: high upfront capital costs, system performance risk, and complex design and permitting processes. In addition, SPPA arrangements can be cash flow positive for the host customer from the day the system is commissioned.


Adapted from Rahus Institute’s “The Customer’s Guide to Solar Power Purchase Agreements” (2008).

A host customer agrees to have solar panels installed on its property, typically its roof, and signs a long-term contract with the solar services provider to purchase the generated power. The host property can be either owned or leased (note that for leased properties, solar financing works best for customers that have a long-term lease). The purchase price of the generated electricity is typically at, or slightly below, the retail electric rate the host customer would pay its utility service provider. SPPA rates can be fixed, but they often contain an annual price escalator in the range of 1 to 5 percent to account for system efficiency decreases as the system ages; inflation-related cost increases for system operation, monitoring, and maintenance; and anticipated increases in the price of grid-delivered electricity. An SPPA is a performance-based arrangement in which the host customer pays only for what the system produces. The term length of most SPPAs can range from six years (i.e., the time by which available tax benefits are fully realized) to as long as 25 years.

The solar services provider functions as the project coordinator, arranging the financing, design, permitting, and construction of the system. The solar services provider purchases the solar panels for the project from a PV manufacturer, who provides warranties for system equipment.

The installer will design the system, specify the appropriate system components, and may perform the follow-up maintenance over the life of the PV system. To install the system, the solar services provider might use an in-house team of installers or have a contractual relationship with an independent installer. Once the SPPA contract is signed, a typical installation can usually be completed in three to six months.

An investor provides equity financing and receives the federal and state tax benefits for which the system is eligible. Under certain circumstances, the investor and the solar services provider may together form a special purpose entity for the project to function as the legal entity that receives and distributes to the investor payments from tax benefits and the sale of the system’s output.

Read about the City of Pendleton, Oregon’s system, for more information on how SPPAs work.

In order to claim a system’s on-site solar electricity production towards the Green Power Partnership’s green power use requirements, a Partner must retain the associated renewable energy certificates (RECs) generated by the system.

System hosts may choose to sell the RECs associated with the on-site solar PV system and in their place buy RECs sourced from other geographically eligible green power resources in order to make environmental claims. This process is referred to as REC arbitrage and allows the site host to capture the financial benefits of solar RECs while also making environmental claims and meeting the Partnership’s requirements.

Benefits & Challenges of SPPAs

Benefits for host customer
Challenges for host customer
  1. No upfront capital cost.
  2. Predictable energy pricing.
  3. No system performance or operating risk.
  4. Projects can be cash flow positive from day one.
  5. Visibly demonstrable environmental commitment.
  6. Potential to make claims about being solar powered (if associated RECs are retained).
  7. Potential reduction in carbon footprint (if associated RECs are retained).
  8. Potential increase in property value.
  9. Support for local economy and job creation.
  1. More complex negotiations and potentially higher transaction costs than buying PV system outright.
  2. Administrative cost of paying two separate electricity bills if system does not meet 100 percent of site’s electric load.
  3. Potential increase in property taxes if property value is reassessed.
  4. Site lease may limit ability to make changes to property that would affect PV system performance or access to the system.
  5. Understand tradeoffs related to REC ownership/sale.
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