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Many commercial property owners exploring solar panel options are aware of their substantial costs. What they might not be aware of, however, is the existence of solar power purchase agreements (PPAs). These agreements enable property owners to enjoy the advantages of solar panels without needing to buy them. Want to learn more? Keep reading!
What is a Solar PPA?
A solar PPA is a type of solar financing arrangement whereby a commercial property owner leases out their roof to a solar panel company that will install and maintain a solar panel system on their roof. In exchange, the property owner is entitled to purchase solar electricity from the installer at a significant discount, which can be as substantial as 50-70%, depending on the roof’s capacity. For instance, if a property owner’s monthly electricity bill totals $1000, a solar PPA could potentially cut it down to a mere $300 to $500, resulting in remarkable savings!
Solar Power Purchase Agreements (PPAs) are typically long-term commitments, often lasting for at least 20 years. To engage in a PPA, one would usually need to have a property lease for a similar duration. These agreements are mainly designed for commercial or industrial building owners with a rooftop area of at least 500 kWp (roughly equivalent to 2,500 sqm square meters of uninterrupted rooftop space).
At Solar AI, we provide solar PPAs with contract terms that are as short as 5 years. We are committed to democratizing solar for all commercial property owners.
If you are interested to learn more about this zero upfront cost solar offer, click here!
How does a Solar PPA work?
Here is a detailed breakdown of the steps involved in a Solar Power Purchase Agreement (PPA):
- Agreement: It all starts with an agreement between the homeowner or business owner and a solar provider. This contract outlines the terms and conditions of the arrangement.
- Installation and Maintenance: Once the agreement is in place, the solar provider takes charge of installing and maintaining the solar panels on the property. This involves setting up the panels on rooftops or designated areas.
- Solar Energy Generation: With the panels in place, they start generating solar energy. This energy is owned by the installer.
- Payment Structure: The property owner can buy the generated electricity from the installer at a discounted rate!
What are the Benefits of Solar PPAs?
- Utilize Unused Space: You can put your otherwise unused rooftop to work, generating affordable electricity from the sun.
- Zero Upfront Costs: You don’t have to worry about forking out any money for the solar panel system because you don’t own it.
- Maintenance-Free: You do not need to worry about maintaining the solar panels. That is the solar provider’s job.
- Predictable Costs: You can lock in fixed solar electricity prices to safeguard against unpredictable electricity prices from the grid.
- Eco-Friendly: By going solar, you’re actively contributing to a greener planet. You are reducing your carbon footprint and helping the environment.
- Enhanced Property Value: Solar panels an attractive feature to many buyers, potentially making your property more appealing on the market.
How Much Can You Save with Solar PPAs?
Scenario: You own a cold storage facility that uses 120,000 kWh of electricity per month at a rate of $0.240/kWh, resulting in a monthly bill of $28,800.
Solar PPA Setup: You install a 50,000 kWp solar PV system on your roof, generating 55 MWh of solar electricity each month.
PPA Deal: You can purchase this solar electricity at a rate of $0.120/kWh, a 50% discount.
- Your cost for the first 55,000 kWh from solar panels: $0.120/kWh * 55,000 kWh = $6,600.
- Cost for the remaining 65,000 kWh from the grid: $0.240/kWh * 65,000 kWh = $15,600.
- Total net electricity bill with solar PPA: $6,600 + $15,600 = $22,200.
- Monthly savings: $28,800 (previous bill) – $22,200 (with solar PPA) = $6,600.
- Annual savings: $6,600 * 12 months = $79,200.
Hence, with a solar PPA, you save $6,600 monthly or $79,200 annually without any upfront costs. This could be equivalent to hiring a few more employees for your business!
Is getting a Solar PPA right for you?
Solar PPAs offer clear advantages. However, it’s important to note that buying a solar PV system upfront can result in greater long-term savings compared to a PPA. When you own a solar system, any solar energy generated directly offsets your electricity bills. In Singapore, solar owners can also benefit from alternative payment schemes for excess solar electricity or by selling Renewable Energy Certificates (RECs).
The Bottom Line
Solar PPAs provide immediate cost savings without the need for upfront capital. This is especially beneficial if you lack the initial funds to purchase solar panels or prefer not to own and operate a solar energy system in the long run.
If you are interested in getting a solar PPA with us, click here!
Get an Instant Solar Estimate for your Property Now!
Whether you are planning to install solar panels or just curious about the benefits of solar, our instant solar panel calculator is here to help. Get an estimate of your property’s solar potential and discover potential savings. At Solar AI, we utilize geospatial analysis, big data and artificial intelligence to deliver precise solar information. Our goal is to empower you to make informed decisions about solar energy.