Currently, most solar power generation in countries such as India takes place through grid-connected, MW scale solar power plants.
Of course, until recent times it was the other way round – with Germany and Japan having over 90% of their solar power generated from distributed, rooftop solar power plants. But the times, they are a-changing, and it is currently grid connected MW scale power plants that are the largest driver for solar power, even in Germany and Japan.
Now, the real challenge in the business case for MW scale solar power plants is: The OFFTAKER!
Without an offtaker who is willing to procure all (or at least most) of the power generated, there is no business case.
So much so, at Solar Mango, the first question we ask anyone who seeks our consulting advise is: “Do you have a PPA or are you close to getting one? If not, you might be wasting your consulting money on us!”
Getting a government PPA could of course be quite challenging, because you will have to wait until your central or government comes with an allocation. While such a PPA is indeed coveted – who better than the government as an offtaker for the long term viability of the PPA – the downside is that you cannot get a PPA when you need it; you will get it only when the government needs you!
The second avenue to get a PPA is signing such a PPA with a private firm. This is indeed a far wider possibility than the government PPA, but third-party private PPAs have their own challenges. The main challenge is in identifying an off-taker: Not everyone relishes ditching the conventional utility (even if partially) and jumping into bed with a renewable energy power plant. Even if they do, many firms ask themselves why they cannot simply put up their own solar power plant instead of buying from another power producer, as operating a solar power plant is supposedly quite simple!
But not all firms would like to do stuff that is not their core business and this is why companies such as Google sign third party, private PPAs.
According to this news report,
“In one of the largest solar projects undertaken in North Carolina, Google will benefit from Duke Energy Carolinas’ Green Source Rider program – meeting a portion of the power demand from the company’s data center in Lenoir with solar energy.
A 61-megawatt solar project will be constructed in Rutherford County in Duke Energy Carolinas’ service territory. Under a power purchase agreement with the Rutherford Farms, LLC, solar project, Duke Energy will secure power to meet new energy demand from Google’s expanded data center.
Enrollment in the Green Source Rider means Google will use renewable energy sources for a portion of the energy supplied to its expanded data center in the city of Lenoir. Under the program, Duke Energy and Google agreed on the specific project and additional costs associated with energy from the facility.”
While third-party, private PPAs are still quite not mainstream, we at Solar Mango expect these to become more prominent as the cost of solar power continues to decrease all the time, making grid parity a reality for many regions in the world.