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Wind Power Purchase Agreements

Wind Power Purchase Agreements

A Wind Power Purchase Agreement is a prime example of something that sounds much more complex and technical than it really is, although in all fairness, the reason for this can be neatly summed as an over dependence upon jargon terminology and legalese terms that has the sole remit of confusing and bewildering the average user.


Wind Turbines

In essence, a Wind Power Purchase Agreement is nothing more elaborate, outlandish, exotic or complex than a simple business contract between a legal person that owns a source of power (be it wind, fuel, solar, hydro, gas, electric etc).

Sometimes, although it must be noted, not always, the Power Purchase Agreement will require that the parties to the contract provide the services specified in the contract to one another to the exclusion of all others.

As with any other form of business contract, a wind Power Purchase Agreement will follow a set of procedures and so it will contain a clearly explained and detailed overview of the timeframe within which the project will be required to adhere to, along with the various milestones that exist. Some examples of the various progress milestones to be achieved include the specification of the amount of energy to be provided by a certain period of time, along with the final date by which payment can be competently received.

As alluded to earlier within the article, wind Power Purchase Agreements are legally binding contracts, and as such, non-performance of the contract will mean that the offending party, i.e. the party to the Power Purchase Agreement that is responsible for the breach of the terms of the contract, will leave themselves wide open for further problems down the line. The aggrieved party can raise a civil lawsuit in order to demand and ensure that either performance of the outstanding obligation is achieved, or that compensation is awarded.

Currently, the most commonly found and most profitable form of Power Purchase Agreement in the United States of America happens to be solar based Power Purchase Agreement and the reason for this is due to the fact that solar farms are becoming increasingly common. Wind turbines on the other hand, which have been around for centuries are becoming more common and are the fastest growing form of alternative energy in the U. S. Thus, wind power purchase agreements between utility companies and consumers are becoming increasing common.

Another form of wind power purchase agreement is between a small wind farm provider and surrounding homes or businesses. These types of providers typically undersell the electric company and supplement a home’s energy needs driving down costs.

There are also companies the will install small wind turbines on a homeowner’s land in and offer wind power purchase agreements. Typically, they own the wind turbines and charge homeowners a low monthly rate for the electricity generated and used. These deals are attractive to many since no upfront investment is needed only a monthly billed based upon usage.

The downside to most power purchase agreements for homeowners is that some companies will require a long-term contract. This is fine for people who live in their homes for long periods of times, but for those wishing to move within a few years, they may be obligated to keep paying on the agreement depending upon whether the new homeowners are willing to transfer the agreement to themselves.

If part of the agreement to sell the home is that the wind turbines stay in place and the former owners continue to pay, then this can be a sticking point for selling the home. However those who offer wind power purchase agreements will tell you that having wind turbines on the property cutting down electric bills increases the selling value of the home so you may break even or make a profit on the costs.

Another of the primary motivations for the usage of a Power Purchase Agreement on a large scale is to protect against the need for additional power plants to be constructed in regions that require a stable power supply, and it is for this reason that the Power Purchase Agreement mechanism has been used in areas of scenic beauty in order to protect the area from further development.

Unfortunately, the output provided by the energy sources referred to and covered within the Power Purchase Agreement is not always guaranteed or reliable and as such then, the parties relying on the Power Purchase Agreement will need to ensure that there is a backup source of power available.

For this reason, it is quite common for wind Power Purchase Agreements to specifically make provisions and reference to “power curve issues” which may, or may not, be enforced by virtue of sanctions such as penalty fees.