For businesses committed to sustainability and cost-effective energy solutions, a Power Purchase Agreement (PPA) is a powerful tool for incorporating solar energy. In a PPA, a power consumer (the buyer) contracts with a power generator (the seller) to provide renewable energy at a predetermined rate over a long period—usually 10 to 30 years. While PPAs are available for various energy types, they are particularly common in solar and other renewable energy sources, offering a streamlined, low-cost way to go green without the operational burdens of system ownership.
With a PPA, the terms of energy production, delivery, and payment are clearly defined upfront, including the price per kilowatt-hour, duration of the agreement, and responsibilities around maintenance and performance. This high-level look at PPAs shows why they’re often the smarter choice for businesses seeking to integrate solar energy into the built environment.
In Georgia, the Solar Power Free-Market Financing Act of 2015 (HB 57) introduced a framework that allows electricity customers to incorporate solar technology on their properties without an upfront investment. Under this law, commercial customers can enter a Solar Energy Procurement Agreement (SEPA) with a third-party provider, who installs, owns, operates, and maintains the solar system. Rather than paying for the installation outright, the customer compensates the provider based on the solar system’s output, making solar more accessible and affordable.
Because SEPAs are equivalent to PPAs in practice, we use the term “PPA” here for clarity, as it is the more universally recognized term for this arrangement. Now, let’s explore why a PPA often provides a better business case for solar than owning a system outright.
As more businesses and organizations focus on emission reduction and incorporating sustainable practices into operations, adopting renewable energy is inevitable. Companies and sustainability leaders often explore owning renewable power systems outright or entering into PPAs. Below is a comparison between the two options.
Some organizations will choose to own and operate a solar power system themselves. There are a few drawbacks to going down this route.
Purchasing a solar system outright requires significant upfront capital. Businesses need to allocate funds for every aspect of the project—site analysis, system design, contractor selection, insurance, and long-term maintenance. This investment can strain budgets and divert capital from other business priorities, especially considering that the payback period for solar systems can span years before any cost savings materialize.
Operating and maintaining a solar system over its 20-plus-year lifespan is no small feat. It often requires either hiring skilled personnel or outsourcing O&M to a third party. If outsourced, businesses will pay additional fees to an external provider, one not involved in the original system build. Over time, these expenses add up, detracting from the original purpose of the solar investment.
| Solar power systems, like Cherry Street's with the Classic Center in Athens, GA, can cost millions of dollars in construction and maintenance. |
With a PPA, businesses avoid the significant upfront costs and complex maintenance demands of system ownership. Here are the core advantages:
PPAs enable companies to access solar power without a large initial capital outlay. The solar provider assumes responsibility for the design, procurement, and installation of the solar system, eliminating the need for businesses to budget for these expenses. Instead, businesses can focus on other priorities while still benefiting from renewable energy.
PPAs shift operational and financial risks to the developer. From construction and system performance to long-term maintenance, the provider is accountable. This means that businesses can incorporate solar without facing the uncertainties and potential headaches of managing the system over time.
PPAs offer predictable energy prices, shielding businesses from energy market volatility. The agreed-upon cents-per-kilowatt-hour rate stays consistent, creating budget stability. With traditional energy costs on the rise, businesses often experience immediate energy savings from a PPA, with continued savings over the contract term.
PPAs can be structured with a framework that allows businesses to expand their solar footprint over time. For companies operating multiple facilities or planning growth, this flexibility makes it easy to add new solar systems under the same agreement, ensuring steady progress toward Scope 2 emissions reduction goals.
| Through one of these agreements, Cherry Street has streamlined the incorporation of solar energy for Fulton County, including a battery storage installation. |
For businesses looking to reduce emissions, cut costs, and simplify their path to sustainability, a PPA provides a compelling alternative to outright system ownership. By partnering with a trusted solar provider through a PPA, companies gain all the advantages of clean energy without the financial and operational burdens of ownership.
The benefits are clear: no upfront costs, guaranteed price stability, and freedom from the complexities of system maintenance. With a PPA, businesses can focus on what they do best, knowing that their energy needs are met sustainably and cost-effectively.
For organizations serious about achieving their sustainability goals without straining resources, a PPA isn’t just an option—it’s the smart choice.