A Free-Market Energy Blog

NREL to Universities on Solar PPAs: The Whole Story?

By Glenn Schleede -- February 9, 2016

“‘Green’ to ‘nongreen’ cost-shifting is legal under current laws and regulations. Whether the actions of the purchasers — not to mention the promotion of the schemes by DOE, EPA and NREL officials — is morally acceptable is a separate question.”

I received this notice from the Green Power Network regarding a “free” webinar from the Office of Energy Efficiency & Renewable Energy (US Department of Energy), to be held February 24, 2016:

More than 60 universities have used solar power purchase agreements (PPAs) to deploy more than 100 megawatts of solar PV on campuses around the country. This webinar is intended for university financial planners and other stakeholders who are assessing the financial aspects of deploying solar. The speakers will provide an overview of how universities are using PPAs and key PPA components. In addition, they will discuss the process of using PPAs, why PPAs make sense for campus solar deployment, and the benefits and challenges for universities. Tools and other resources will be shared to help universities interested in using PPAs for campus solar deployment.


  • Jenny Heeter, Senior Energy Analyst, NREL

  • Eric O’Shaughnessy, Renewable Energy Analyst, National Renewable Energy Laboratory

I hope that the two NREL speakers — both of whom are living on our tax dollars (and adding to the $19+ trillion national debt) will be honest and objective in explaining what happens economically when universities and other organizations buy “renewable” electricity via purchase power agreements.

Specifically, these organizations are shifting a significant share of the cost of the electricity they use to ordinary American citizens, taxpayers and consumers.  If the speakers don’t understand the economics, it’s time that they learn that the “green electricity” buyers shift away their costs in two key ways.

First, the “green” or renewable electricity is purchased from the owner/operators of the green (usually wind or solar facilities) at a “bargain price” that is made possible by federal and our state tax breaks and subsidies (at least $0.023 per kwh due to the federal Production Tax credit (or the PTC).  (The facility owners or operators would have to charge at least $0.023 per kWh more in their PPA.

The cost burden of these tax breaks and subsidies (hundreds of millions per year is shifted to remaining taxpayers and /or it becomes part of the growing national (and/or states’) debt (which will continue to grow due to interest costs) that will be borne by our children and grandchildren for decades to come.

Second, universities and others buying “green” electricity through PPA’s escape an additional share of the true cost of the electricity they use because the PPAs in effect permit the purchasers to take electricity from the grid serving their facility at any time they wish (they have a “firm” source of electricity even though the seller of the ‘green’ electricity provides electricity to the grid only on an intermittent and unreliable basis (when the wind is blowing or the sun is shining).

The managers of the grid must provide a reliable electricity supply 24 hours a day, year round.  This means that reliable generating units must always be immediately available to produce electricity when the “green” electricity producers aren’t producing.

Supplying reliable power costs money, and those costs are shifted from “green” energy producers to other electricity users supplied by the grid. Green electricity buyers (universities and others commercial organizations) using the green electricity PPA agreements  are engaging in “arbitrage” with significant benefit to themselves and significant costs shifted to others.

‘Green’ to ‘nongreen’ cost-shifting is legal under current laws and regulations. Whether the actions of the purchasers — not to mention the promotion of the schemes by DOE, EPA and NREL officials — is morally acceptable is a separate question.

In any case, it’s time for DOE, EPA, and NREL officials and employees to tell the whole story.


P.S. This webinar is not really “free” as advertised. You have just already paid for it with the high salaried employees involved and the IT costs behind the event.


  1. Greg Rehmke  

    I agree that these transfers are a problem. Can advocates of solar energy made the counterclaim that distributed solar power is available at high demand times, as when bright sunlight powers solar panels just when maximum power is needed for air conditioners? I remember reading the a key economic cost for utilities is the peak one hour each day when maximum power is drawn by consumers. So utilities have to pay for generating power used just an hour a day. Does (or can) solar help with this?

    Separately, I can imagine battery storage producers might help lobby for reforms that focused on fixing the reliability issue so green power subsidies would be amended to insist producers be reliable (forcing them to add battery storage). That would add to costs but benefit battery storage system producers.


  2. Kevin Balch  

    Look the background of the two speakers. One has a BS in Political Science / Environmental Studies and and a Masters in Environmental Policy. The other, a BS in Environmental Economics and Policy with an unspecified Masters. Not the best qualifications for judging the engineering feasibility of SBSP.


  3. Weekly Climate and Energy News Roundup #215 | Watts Up With That?  

    […] NREL to Universities on Solar PPAs: The Whole Story? By Glenn Schleede, Master Resource, Feb 9, 2016 http://www.masterresource.org/sola… […]


  4. Ron Promboin  

    The situation can actually be worse. If a university pays anything extra for electricity on claimed “social” grounds, its indirect costs go up. Then, student charges go up, student loans go up commensurately, and so forth.

    When it comes to federal grants, indirect cost increases can only lead to bigger $ grants.

    So, the PTC isn’t necessary to the economic issues.


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