Whether to achieve enhanced reliability, to utilize renewable resources, to make use of cogeneration in response to natural gas prices, or to take advantage of tax and other financial incentives, facility owners are increasingly installing on-site generation to provide power. On-site generation can include cogeneration, solar and wind power, fuel cells, and other technologies that produce electric power.
A power purchase agreement (PPA) is an important practical and financial tool for acquiring on-site generation. A PPA permits the facility owner to outsource the responsibility for designing, financing, procuring, constructing, permitting, operating, maintaining and, if applicable, obtaining fuel for the on-site generation facility. In consideration, the owner agrees to purchase the energy production and provide a site by a lease or an irrevocable license for the use of the seller\provider on the property of the owner.