A power purchase agreement is an arrangment between usually two parties – the host and a services provider – whereby the host allows the provider to install a renewable energy system on its property and agrees to purchase the power generated by the system for a specific time frame, usually around 20 years. The host does not own the system. PPAs are used for solar and wind installations, with solar being the most prevalant by far. I have heard that geothermal transaction of this type was is in the works, if not done already. The power created by the system is used by the host, who has the right to sell any excess power created above and beyond the host’s needs to the local utility.
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