When purchasing renewable power, a typical utility-scale buyer can lock in an energy rate for 20 years. Renewable energy prices are not affected by fuel price fluctuation, nor are they impacted by water scarcity. Buying renewable power can help protect utilities from exposure to price spikes in fuel prices and carbon regulation. Alternatively, owning a renewable energy project can offer a consistent stream of revenue for decades.
How Does It Work?
There are several ways to take advantage of the hedging qualities of renewable energy products with long-term, fixed pricing.
Traditional Power Purchase Agreement (PPA)
In a traditional power purchase agreement, a customer signs a contract to purchase a specified amount of energy from a renewable energy project for a specified length of time at a specified price. In this case, the customer is purchasing the actual electrons that are being added to the grid by the project. PPAs are generally most attractive to utilities, municipalities, and electric cooperatives.
Customers may also capture the hedge benefits of renewable energy through project ownership. Apex can deliver a turnkey facility with ongoing asset management services during the life of the facility.
“This project is great for our customers. For the first time, we’ve been able to add renewable energy at a cost comparable to our other energy resources. In addition, the project will bring about $90 million to the state’s economy during construction and provide millions more in ongoing economic benefits.”
Mark Ruelle, Chief Executive Officer
200 MW PPA from Kay Wind, OK
“With these long-term power purchase agreements we’re adding a significant amount of Oklahoma wind energy, bringing more diversity to our fuel mix, and doing so at a price that will provide substantial savings for our customers.”
Stuart Solomon, President and Chief Operating Officer
AEP Public Service company of Oklahoma
200 MW PPA from Balko Wind, OK