Traditional notions of asset ownership are changing. This is exemplified by a decline in car ownership due to the popularity of rideshare services such as Uber, Didi and Ola. So too the growth of solar as a service (PPA) is enabling more businesses to access solar energy by eliminating up-front costs. PPA has numerous benefits for businesses large and small – take a look at the top 5 now.
Firstly, what is PPA (Power Purchase Agreement)?
Power Purchase Agreement, also known as Solar Energy as a Service (SEaaS), is where you buy solar power that’s generated from panels installed on your roof, without paying for the assets, installation and maintenance.
1. No upfront costs
A barrier to entry for many businesses is the capital outlay on solar panel assets themselves, as well as their installation and ongoing maintenance. When it comes to solar, while you can see savings on energy costs over time, your business still needs the funds to pay all the upfront costs. Utilising PPA means you only pay for the electricity you use, much in the same way you do with any other energy provider. Except with PPA, you know the energy is renewably generated.
2. Low-cost sustainable electricity
Energy costs continue to rise in Australia. And while competition exists among energy retailers, it’s energy providers that have the biggest impact on how much you end up paying. And the ‘big three’ (AGL, Origin Energy, and EnergyAustralia) have the lions’ share of the market. For example, in New South Wales, the big three provide over 80% of the state’s energy. Meaning, to really reduce the cost of your energy bills you need to produce the energy ‘yourself’ – either independently or through a PPA provider.
3. The agreement is transferable
When it comes time to sell your business premises, figuring out what to do with your owned solar panels can be tricky. While they may increase the value of your property, if the buyer has no interest in them, many businesses just cut their losses. However, with Power Purchase Agreement most agreements are transferable at no cost, which can be far more attractive for potential buyers. It also means you can simply set up a new PPA solution at your next premises, without the capital outlay.
4. Only pay for what you use
If the PPA provider produces less than the forecasted amount of energy or fails to generate electricity for a period of time, then you don’t have to pay for the shortfall i.e. the gap between what’s utilised and what’s generated.
5. You can buy the solar panels outright
Similar to a novated lease, at the end of your PPA term you have the option to buy the solar panels outright or renew the agreement again. Depending on the length of the Power Purchase Agreement, you could pay as little as $1 for all of your panels.
Explore the Solarpedia community to discover more PPA benefits
Solarpedia is a community of engineers and commercial solar industry experts. Through Solarpedia, you can connect with trusted professionals, access free independent assessment tools – such as our online commercial solar pricing calculator – and explore a solar knowledge hub. For more information about Solarpedia, or to connect with a PPA expert, get in touch today.