Among numerous highlights in the National Renewable Energy Laboratory’s recently published Geothermal Power Production and District Heating Market Report, one in particular stands out: since 2019, 11 new geothermal power purchase agreements have been signed across four states. This is a big deal in renewable energy circles, but why should it matter to us, the energy consumers across the country?
Geothermal PPAs signed from November 2019 through September 2020. The new PPAs serve the California market, with one apiece in Utah, Alaska, and Hawaii. Image courtesy of NREL.Geothermal PPAs signed from November 2019 through September 2020. The new PPAs serve the California market, with one apiece in Utah, Alaska, and Hawaii. Image courtesy of NREL.
Power purchase agreements are the contracts that allow utilities to procure electricity from power plants. These agreements help determine how much you ultimately pay for the electricity that charges your phone, fires up your television on game day, lights your home, and, in general, powers your life.
Let’s start at the beginning…
Let’s start at the beginning…
A Star is Born
- Any electricity delivered to your home has its origins in a power purchase agreement (PPA). A PPA is a contractual agreement between a power plant operator (seller) and a utility (purchaser).
PPAs make electricity prices predictable by locking them in place for the duration of the contract term, which typically lasts 15-25 years. This arrangement benefits both sellers and buyers. Sellers can more easily secure funding from lenders because they can prove, with their PPA, that they will have a steady revenue stream for y
