Power Purchase Agreements: Making Renewable Energy Possible (or at least more likely)

By Frank Young

            Power Purchase Agreements (PPAs) are contracts which assure that a market exists for those kilowatt hours of electricity generated by the solar panels, wind turbines, coal fired steam turbines, or other electricity generating mechanisms.  Such contract agreements are necessary to allow the financiers of electricity generating facilities to know that willing buyer-seller agreements from which to market the electricity produced are in place. 

            Under existing West Virginia law, only licensed utility companies can sell electricity on a retail level to a consumer of electricity. This means that electricity sold at retail (directly to consumers) in WV is only sold by subsidiaries of either American Electric Power Co. or of First Energy Corp.  Currently Power Purchase Agreement contracts are exclusively wholesale level power sales contracts between electricity producers (for example owners of steam generated power plants like First Energy Corp) and their subsidiary retail marketers such as Monongahela Power Co.  PPA contracts are also used by, for example, the owner of a wind energy facility (such as Invenergy Corp., the owner of the Beech Ridge Wind Farm in Greenbrier County) that generates electricity for the wholesale electricity market and a public utility electricity retailer such as Appalachian Power Co. or Monongahela Power Co.  

            Retail level PPAs are not allowed in West Virginia.  I cannot contract a Power Purchase Agreement (PPA) with XYZ Solar Co. to put solar panels on the roof of my home in order to sell me the electricity thereby generated. Why not? Because XYZ Solar Co. is not a legally designated public utility that is set up to serve all customers in a designated service area.  

            The Legislature could fix this.  By statute, it could allow a solar power company to install solar panels on a home and sell the electricity (a Power Purchase Agreement) to the homeowner without being considered a public utility subject to the requirements of the Public Service Commission.

            The effort toward allowing retail level PPA contracts relates mostly to rooftop solar panel installations on residential structures such as a home or an apartment building. This would be a revolutionary approach to how electricity is produced, distributed and marketed.  The big utility companies currently display no interest in furnishing their customers rooftop generated electricity.  And so the existing electric utility companies fight against legislation to allow contracts (Power Purchase Agreements) between consumers and rooftop solar panel leasing companies.   

            Why is this important to WVEC and its organizational members such as WV Highlands Conservancy? It is important because small scale (sized to provide electricity to individual households, for example) renewable energy resources such as solar panels would reduce the market demand for fossil fuel fired electricity. This would reduce the amounts of coal or other steam produced electricity fuels that would need to be mined, transported and burned. This would, in turn, reduce the local miseries caused by mining coal and of drilling and fracking for natural gas, as well as allow an overall reduction of the harmful effects of burning fossil fuels on regional and worldwide climate. Less fossil fuel combustion equals less both local disruptions and worldwide pollution.

            This will not be the first attempt at allowing retail Power Purchase Agreements.  There was a bill in the 2019 Legislature that would have done that.  Unfortunately, it died in the Senate’s Energy, Industry & Mining committee.