Now, innovative financing mechanisms, including yieldcos, solar-asset backed securities, and crowdfunding, have significantly reduced the cost of capital for solar projects, and ushered in a new era of solar project development. Similar innovation in PPA sales models now allows customers to purchase the power produced by large, offsite solar systems, directly. This model enables institutions, from business to universities to municipalities, to access the economic and environmental benefits of solar power.

THE ECONOMICS OF SOLAR PPAS

For customers that elect not to buy offsite systems, outright, PPAs are an attractive financing alternative. The economics of solar PPAs have become significantly more compelling in recent years, as installed costs dropped from $10/watt in 2006 to $1.75/watt in 2014. Furthermore, precedents set by large, well-known industry participants have streamlined the accounting, contracting, and related technical support for offsite systems—all critical barriers that are keeping the cost of solar high.

At the beginning of 2014, the National Aquarium ­– located in the heart of Baltimore’s Inner Harbor– wanted to install a solar power system to meet sustainability goals and meaningfully impact monthly energy spends. However, its uniquely designed roof was inhospitable to rooftop solar. Furthermore the roof was not large enough to accommodate a system that would make a dent in the Aquarium’s electricity bill.

The National Aquarium entered into an offsite PPA for a 4.3MW PV project located in nearby Cambridge, Maryland. The system, which came online in May 2015, will generate nearly 6,000 MWh of energy in its first year of operation. Nearly 40% of the National Aquarium’s electricity needs for the next 25 years will come from the Cambridge system. Constellation – the National Aquarium’s energy provider – owns and operates the system and integrates the power generated from project into the National Aquarium’s existing power supply.

Maintaining grid resiliency is a key concern for utilities charged with managing an aging electricity grid and integrating a growing number of rooftop systems.

GRID RESILIENCY

The offsite solar model benefits extend to stakeholders beyond the electricity customer. For the local community, low-impact solar projects support the tax base. For landowners, these projects create long-term, sustainable revenue streams from often underperforming plots of land. Offsite solar projects are even beneficial to the utility, as these installations pay to support transmission and distribution networks and serve as distributed generation resources on the grid. Maintaining grid resiliency is a key concern for utilities charged with managing an aging electricity grid and integrating a growing number of rooftop systems.

The solar development market is booming, in large part due to falling capital and financing costs. Nonetheless, electricity customers have only just begun to tap into the economic and environmental benefits of clean, fixed-price power. Offsite solar represents a breakthrough model for customers in our evolving energy marketplace, one that’s sure to attract organizations previously unable to install systems on their property.