Power Purchase Agreement
= "The solar PPA enabled users to purchase solar-generated electricity as they consumed it, with no upfront cost of building a solar plant".
Description
"a brand new phalanx of wind turbines towering over the flat fields of southern Holland’s coastline will start to turn – and as they do, they could be powering a quiet revolution in the circular economy.
The turbines at the Windpark Krammer development are the fruit of an unlikely collaboration between 4,000 members of two local Dutch co-operatives – many of them vegetable and flower growers – and a consortium of four major international companies: Akzo Nobel, Royal DSM, Google and Royal Philips. Together, they have agreed to buy 350,000,000 kWh of electricity (equivalent to the needs of 100,000 households) each year over the next 15 years. In doing so, they’re both ensuring that the wind park is viable, and helping guarantee their local electricity supply – while at the same time hitting their sustainability targets.
It’s the first such collaborative Power Purchase Agreement (PPA) – but it’s coming on the back of a growing number of direct deals between individual companies and renewable energy providers – typically wind and solar parks. They’re effectively cutting out the middleman: power utilities. According to a new report from the World Business Council for Sustainable Development (WBCSD), there are now over 50 such schemes underway, mainly in the US, Mexico and Europe – areas whose regulatory regime favours direct purchase." (http://seynetwork.eu/news-posts/renewable-power-purchase-agreements-a-path-to-the-circular-economy/)
Discussion
Paul Lightfoot, CEO of hydrophonic greenhouse producer BrightFarms:
“To truly shake things up in a market, innovations also need new business models as well as what Christensen calls “value networks” – new supply chains, channels to market and so on. Without such support, established leaders can squash or co-opt new players, sometimes killing or at least sidelining their innovations along with them. Sometimes it can take a long time for new business models and value networks to evolve in support of a “new” technology.”
Take “solar power. The sun as a source of energy dates back to ancient times, of course. But its first potentially mainstream applications – most notably a satellite powered by a small solar cell – emerged in the 1950s.
Solar technology research and development has continued over the last 50-plus years, but solar languished as a commercially viable alternative to fossil fuel-based sources of energy because of low oil prices.
We did not make significant progress in the deployment of solar until it made business and economic sense. As the price of a kilowatt-hour of electricity rose, the price of solar in many markets suddenly made economic sense. Even then, it took a business model innovation – the power purchase agreement (PPA) – for rooftop solar to take off. The solar PPA enabled users to purchase solar-generated electricity as they consumed it, with no upfront cost of building a solar plant.” (http://gigaom.com/cleantech/how-a-new-business-model-could-revolutionize-fresh-food/)