Solar Power Purchase Agreement – A Win-Win-Win
Much like the approach employed for photocopier machines, procurement of solar using a PPA energy strategy ideally modelled to provide a lower price than that which they would be paying for mains power and merely enables a business to purchase green power without the costs of ownership.
The easiest way to comprehend a solar lease is to think of it like this: today, should you not need a solar system (or alternative distributed energy generation system), you’re purchasing all your power from electric utilities. You get a quarterly or monthly invoice for the power that you are provided by them, and – although you could research cutting your electricity usage or by investing in energy efficiency measures – there’s little that can do to decrease the rate where you are charged to work with power.
Interestingly, common objections to the concept of a PPA contain ‘we possess the funds open to get a system outright’ or ‘ we locked in having an energy contract on low rates’. Nevertheless, neither of those scenarios rule out the viability and attractiveness of a PPA arrangement, especially if improving environmental practices, public image and the company triple bottom line are important.
On the flip side, purchasing a commercial solar electricity system outright or on low interest finance is commonly viewed as a superb investment to future-proof a business with regard to energy, versus always paying continuing electricity bills. At face value this appears a realistic proposition, as its cash a business would have eventually spent on electricity bills anyhow.
Nonetheless further to the energy savings one needs to factor in the possession costs, such as ongoing care, insurance, the likelihood of equipment failure, under-performance, lost chance had the money instead been spent on core business wants, as well as the related losses if the solar provider were to disappear.
Outright purchase is undoubtedly not a ‘set and forget’ suggestion, as some may suggest even if your company was to invest in a good-quality commercial solar system.
In contrast, a solar PPA energy strategy solve these possible pitfalls of possession and can be readily incorporated with all the existing energy contract of the company, which will be possibly a PPA is becoming a favorite strategy by businesses worldwide.
In addition to zero up-front outlay in some cases; a few of the numerous edges for commercial operations, government entities along with other organisations of sourcing solar power with a PPA or operating lease through Energy Matters include:
- Removal of a system of the load of possession
- Electricity remains an operational expense
- Economies on electricity prices
- Built-in redundancy – you preserve entry to mains grid power.
- Operating lease generation guarantees
- Hedges electricity cost rise danger
- Complete O&M servicing 24/7 remote monitoring
- Potential to easily expand or add on new technologies as required
In particular, solar leasing deals have a tendency to truly save the most money for all those who consume a higher-than-average amount of electricity and whose quarterly invoices are above or around $1,000.
It can be a successful strategy to save money and reach carbon offset targets as PPAs take away the upfront capital cost of solar. Therefore, instead of large business thing budgeting to get a 100kW solar system on a single site or a Council, they will hopefully see additional value in installing an impressive 1-2MW of solar spread across multi websites.
Remember that with PPA or a solar lease, you really do not possess the system yourself – it is owned by the company that finances it. It can be possible to purchase the system to get a discounted cost at the end of your contract period, however.
The theoretical result is a net electricity bill that is lower than what you would normally pay for power and never having to purchase a system to be set up. The financing firm still makes a profit, because the cost of solar power has come down so dramatically previously few years plus it is better for the environment. It’s a win-win-win situation.