A Power Purchase Agreement for solar (or PPA for short) refers to a contractual agreement between the customer (electricity consumer) and a PPA provider. A solar installer designs and delivers the solar PV system, while the PPA provider funds the project. The customer buys the electricity generated at a lower rate compared to their regular energy rates.
PPAs are a solid choice because they enable you to save on your energy bills, lessen your exposure to energy market price fluctuations and improve your sustainability credentials without any upfront cost. A PPA makes solar power more accessible to companies who may not have the capital funds to be able to invest in a solar energy system. Eligibility depends on a company’s grid connection agreement, the location and energy consumption. Establishments with higher energy needs will have increased access to PPA options.
Here are six reasons to start looking at Power Purchase Agreements for solar today:
1. You start saving money immediately – Without any upfront cost, you will benefit from lower energy rates from day one. The size of the saving will depend on the size of your solar PV system and the amount of energy you use, but if your energy bills are a considerable portion of your overheads commercially savvy businesses will see an immediate benefit.
2. Sustainability targets – Many companies use PPAs to meet their sustainability objectives by sourcing clean energy to lower their carbon footprint. Losing a crucial contract because you can’t meet a set of required sustainability criteria is a tough pill to swallow; and there is an increasing requirement for supply chains to demonstrate emission reductions. PPAs can help you fulfill environment, social and governance (ESG) commitments and further enhance your company’s reputation.
3. Lightning quick route to renewable energy – Businesses that are quick to take advantage of onsite renewables give themselves the best opportunity to get ahead of the competition, and their neighbours. Grid connections are often limited, so if there are several businesses in an industrial park it’s highly likely that they won’t all be able to switch to solar. Those that act now are more likely to get connected, and businesses that delay may have a long wait for grid upgrade works. The early bird catches the worm!
4. They focus on renewable energy growth – Talking of renewable energy – PPAs are mainly used to acquire electricity from renewable sources, which helps reduce reliance on fossil fuels, reduce greenhouse gas emissions and create a cleaner energy mix. PPAs don’t always involve an installation on your roof, they could support a larger scale renewable energy project further afield. Either way, as more businesses and organisations commit to renewable energy through Power Purchase Agreements, they accelerate the growth of the renewable sector, helping to create a greener future.
5. They offer price stability – by locking in electricity prices for an extended period, between 10 and 25 years, Power Purchase Agreements provide businesses with price stability and can protect them from the volatility of the current energy market. This predictability in energy costs allows businesses to budget more effectively and reduce the financial uncertainty that comes with fluctuating energy prices.
6. Investment opportunities – PPAs offer financial stability for renewable energy developers, helping them to secure funding for new projects and increase renewable energy production. The cost savings that can be delivered for PPA customers can unlock further investment for those businesses, for example, farming and manufacturing businesses can use energy bill savings from PPAs to invest in costly machinery.
Find out more about Power Purchase Agreements – contact us today to see if they are right for you.
