At Skylamp Solar, we understand the wide range of benefits that solar power can give any business. But we also understand that sometimes it is just too risky to attempt to finance the installation of a solar PV system yourself.
But this doesn't mean that your business can't benefit from solar power. Entering a solar power purchase agreement (solar PPA) can give you all of the benefits of solar power without any of the upfront costs or risks.
Let's take a look at how solar power purchase agreements work and why they could be the perfect option for your business.
A power purchase agreement (PPA) is a financial arrangement between you and a solar PV system (or another green electricity generator) installer. It can come in a few different forms but the most common agreement is that the installer pays entirely all of the upfront cost involved in installing solar panels on your roof space.
In return, they will sell you electricity generated from the solar panels at a rate that is lower than the price you would pay buying energy from the National Grid.
It is almost always a long-term lease, between 10 and 25 years. During this period the installer, and not you, are entirely responsible for the repair, operation, and maintenance costs associated with the solar PV system.
At the end of the lease, you will usually get to keep the system for the duration of its life. This is usually another 10 to 20 years, during which time you will be able to get free solar PV electricity.
One of the main benefits, of course, of using solar electricity is reduced energy costs. Even though you don't own the solar panels under a power purchase agreement, you will still benefit from the energy savings associated with it.
Every kilowatt of energy that you use from the solar PV system will be sold to you at a lower price than the equivalent taken from the grid. If you need more energy than the solar system can give you then you will buy this from your energy providers as normal. So overall, you will end up with reduced electricity bills.
The lower electricity price serves to provide your company with a more sustainable long-term outlook and can even help you to invest more money into developing your business.
The price you pay for the electricity generated from the PPA's PV system will vary. Some developers offer the electricity units at a fixed cost, which can be beneficial because the fixed price means that there is a predictable cost associated with your energy.
You may also be offered the electricity at a variable cost, which will be in line with the market price for the energy units. This does mean that you may at times be paying more but it also means that you will pay less when the unit price drops.
Power purchase agreements can be a great option for many businesses and they do come with a range of benefits.
A power purchase agreement allows you to reap the reduced electricity bills associated with renewable energy with no or low upfront capital costs. The developer is pouring their money into the installation of solar PPA on your property, not you. So you don't need to worry about getting together enough money for an upfront investment before you start the installation process.
Operating a solar electricity system does bring with it some financial risk. This includes insurance cover, a maintenance contract, repair costs, and more. With PPAs, the installer is responsible for these risks. This means that your business is safe from any financial risks associated with maintaining system performance.
Switching to renewable energy via solar PPAs provides an opportunity to demonstrate a company's environmental responsibility, often via renewable energy certificates. Being able to show that you are committed to reducing your carbon emissions is becoming more and more important, and can itself contribute to your financial savings.
Once the PPA contract term is over, you will usually own the solar PV system located on your property. And the inclusion of solar energy technology will often increase property value as they are now very much desired by purchasers.
Another type of solar PPA agreement is known as a virtual PPA. Under this type of agreement, the developer sells you power generated from a solar farm that isn't physically located on your property. Once your agreement is in place, the developer will then use that to build a new solar farm.
Again, this agreement means no upfront capital cost for you, reduces your carbon footprint and provides you with lower-cost electricity.
Not all businesses will benefit from a solar PPA. For example, you will often need to have:
If you think that a solar PPA could be right for you, get in touch with us at Skylamp Solar today. We will be able to discuss the options that would work best for your business, determine if it is suitable for you, and will provide you with a proposal demonstrating the nature of the agreement. We look forward to working with you.