SolarCity has signed a power purchase agreement (PPA) with the Hawai’i Institute of Marine Biology of the University of Hawai’i to supply it with solar power.
Incidentally, the university is located on Coconut Island, or Moku o Lo’e, home of the popular 1960s TV show Giligan’s Island!
A PPA is an agreement between a party that wants to buy electricity and another party that is going to construct the power plant that will generate the electricity. This is usually done on a commercial scale. Tiny power plants aren’t usually built for small-scale projects such as powering one house.
Power purchase agreements include details such as when the power plant is to be commissioned, penalties for being under delivery, payment terms, schedule for electricity delivery, and termination.
SolarCity will provide the university with solar electricity at a discount compared to what utility companies usually charge, easing budget uncertainties from fluctuating electricity rates.
This is reminiscent of the fact that, because almost all of the cost of solar electricity is the cost to buy and install the solar panels, the cost of electricity can actually be consistent for many years because there are no significant recurring expenses that can fluctuate and affect the cost to produce electricity. It is almost fixed, helping to guard against economic shocks caused by international fuel embargoes.
Buying your own solar panels is almost equivalent to buying the next 20-30 years of your electricity in advance, so that you don’t have to worry about increasing electricity rates.
The abundance of sunshine in Hawaii makes it a good candidate for solar systems, because fewer solar panels are required to generate the desired amount of electricity in sunnier areas.
SolarCity has been offering a service in the United States that enables residents to have SolarCity install solar panels on their roofs for free (it is leasing, though, so the residents don’t own the panels) to eliminate their electric bills, and then SolarCity charges them a fraction of their former electric bills.
“By giving organizations the ability to pay less for solar electricity than they pay for electricity generated by fossil fuels, we’re making clean power more accessible,” said Jon Yoshimura, director of government affairs for SolarCity. “The University of Hawaii is setting an example for other educational institutions by taking a forward-thinking approach to its energy needs while shifting the school to homegrown solar electricity.”
SolarCity operates in Mililani, Hawaii. It also provides online monitoring and maintenance.