It’s fitting that San Francisco decided to announce a major boost in solar power capacity during a week in which the sun is blazing down on the city with an unseasonable intensity. San Francisco has approved plans for solar startup Recurrent Energy to build and operate 5 megawatts of solar photovoltaic panels that will be used to power the city’s public buildings and services.
This is a huge boost for the city’s solar generation, which is currently only at 2 megawatts. However, it is the details of the deal that are notable. The San Francisco Public Utilities Commission (SFPUC) has authorized the deal under Recurrent’s “solar-as-a-service” plan through a power purchase agreement (PPA). This means San Francisco-based Recurrent will finance, design, build and operate the solar energy projects and provide all the energy generated to the SFPUC for a period of 25 years.
This is a big vote of confidence for the startup, similar to Morgan Stanley agreeing to underwrite $100 million of its solar projects. And it could pave the way for more public-private solar partnerships. But the deal could also be seen as a slightly risky move for a municipality, given that the startup was just founded in 2006 and has been backed by venture capital firms Mohr Davidow Ventures and JEN Partners.
PPAs are on the up and up. Last week Akeena Solar, a residential solar installer, partnered with Sun Run, a solar financier, to make PPAs available to its customers. Using PPAs to sell solar is far more popular in commercial business — Tioga Energy, MMA Renewables and Sun Edison all use a PPA model.
Mayor Newsom lauded the innovative development strategy this week and expressed hopes that it would accelerate solar adoption and free up funds “for residential and commercial solar energy systems through our proposed Solar Energy Incentive Program.” — Look for more from us on some of the hurdles for the Mayor’s plant tomorrow morning.