All posts by Rasheem Saini

Financing your solar panels through an onsite power purchase agreement (Solar PPA)

If you are considering the installation of solar PV panels on your premises, an outright purchase will return the greatest financial benefit. However, if you don’t have the capital, one of the financing options available is an onsite solar PPA.

What is a solar PPA and how does it work?

An onsite solar power purchase agreement (PPA) is an agreement between your business and a PPA provider.

Solar PPA infographic
Solar PPA infographic

Figure 1: Onsite solar power purchase agreement (solar PPA)

As per Figure 1 above, there are three parties to consider; your business, the PPA provider and your electricity retailer.

  1. PPA provider is the installer, owner, operator and maintainer of the solar PV on your premises. The PPA provider sells you the electricity generated from solar for an agreed price and duration, typically ten years. At that time there may be options for you to purchase the panels, for the PPA provider to remove them, to extend the agreement, or to renew a PPA agreement with a new system.
  2. Your business (purchaser, or off-taker) is the buyer of electricity from the solar panels on your premises. You buy this electricity for an agreed price, lower than your grid electricity price.
  3. Your electricity retailer continues to supply electricity from the grid, likely to cover most of your demand, and you will continue to receive a bill from them. Your retailer may agree to purchase excess solar energy generation for a feed-in-tariff. As a result, there will be two electricity bills, one from your PPA provider and one from your electricity retailer.

Free Download: Financing Options for Sustainability Projects

What are solar PPA benefits?

There are many advantages to procuring an onsite solar PPA, which include:

  • No upfront cost – the PPA provider bears the costs associated with the purchase and installation of the solar panels.
  • No on-going operation and maintenance costs – the PPA provider is responsible for operation and maintenance of the solar panels.
  • Helps achieve environmental goals – you can use the electricity generated from the solar panels to reduce your carbon emissions or to meet your renewable energy targets.
  • Lower cost of electricity – the solar PPA price should be lower than the cost of grid electricity and may include a process to confirm that this is the case and adjust over time.
  • Monitoring of and guaranteed performance – the PPA provider monitors and may guarantee the performance of the solar panels as part of the agreement.
  • Potential for expansion and battery storage – a PPA could potentially be expanded to include new solar panels and battery storage. Thus, savings from solar could grow over time with no capital outlay and continued cost savings compared with grid power prices.

What are solar PPA risks?

There are also potential risks associated with onsite solar PPAs, which include:

  • More expensive over the life of the agreement – although there is minimal upfront cost for a solar PPA, the total cost over the life of the agreement will be higher than simply purchasing the system at the start.
  • Duration of solar PPA – many PPAs are for 7 to 15 years, which may be longer than your business can commit unless there is long-term certainty of remaining at the same location.
  • Expansion or change – future development adjacent to or on your facility, or to fixtures attached to your roof may alter the performance of or weaken the case for a solar PPA.
  • Costs to make your property solar-ready – You may incur additional costs such as electrical works, cabling and roof repairs when installing solar panels.
  • Quality of panels – you may have less choice in solar panel and inverter technologies under a PPA.

Panel of preferred solar PPA providers

Councils and government agencies can consider using solar PPA providers from the panel of preferred suppliers established by the NSW Government Office of Environment and Heritage (OEH). Support services offered by the NSW OEH include:

  • a prequalified, carefully vetted panel of Solar PPA suppliers (currently six suppliers) and their contact details
  • the Solar PPA Template Contract which can serve as a basis for your agreement
  • ongoing support
  • the Solar Financing Tool
  • the Solar PPA Program brochure – a brief overview of the program

An agreement template can be found by contacting the OEH through their website.

Your own solar installation(s)

It can be difficult to know what solar PV systems to select and how to best finance them. If you would like to speak to a consultancy that is not tied to any product suppliers, please contact Barbara or Patrick. Here are five reasons why you should choose an independent consultancy.

Please note that we have developed a Financing Guide for Sustainability Projects, which you may find useful.

Download Free Financing Options for Sustainability Projects

Feel free to use an excerpt of this blog on your own site, newsletter, blog, etc. Just send us a copy or link and include the following text at the end of the excerpt: “This content is reprinted from 100% Renewables Pty Ltd’s blog.”

Welcoming Rasheem Saini to our team

My Journey to 100% Renewables

Rasheem Saini and Patrick Denvir from 100% Renewables

A couple of weeks ago, I joined the team at 100% Renewables as Renewable Energy Consultant and soon after got asked to write a blog post about my journey. Currently, in the world, a lot of things are exploited, for example, fossil fuels, animals, and children. I believe we all have a responsibility to correct the imbalance in this world. My way of correcting this imbalance is to work with organisations to help them achieve a socially responsible outcome such as moving to 100% renewable energy, reducing reliance on fossil fuels and promoting a clean and healthier environment.

Renewable energy has been something that I’ve always been passionate about. It’s an industry where I always wanted to work in. When I heard about the company 100% Renewables I knew straight away just from the name that this is where I wanted to work. As I explored what the company did, I saw all the great projects the company was involved in and instantly could see myself working there.

My interest in renewable energy came from when I moved here from India. In India, I was bombarded with the smell of smog, pollution, uncleanliness on the streets, and children begging on the streets. Coming to Australia I saw the difference in air quality, how people are treated more fairly, and the cleanliness of the environment.

Later at 13 years of age and older, my interest in renewables grew, along with my understanding of smog and that it was caused by human factors. The more information I gathered about smog and pollution, the more I was pointed in the direction of renewable energy as the solution.

I decided to become an engineer, inspired by my Grandfather who was an electrical engineer, where most of his work was done in constructing and developing dams for electricity generation. I want to continue his efforts to bring renewable energy to the world.

I aspire to make a change in this world and to work for a company that aligns with my goals – that’s why I chose to work for 100% Renewables, a company that proves that the journey to 100% renewables is not fiction, it is fact. I have already started to work on many exciting projects and I am looking forward to introducing myself to you over the next couple of weeks and months.

 

100% Renewables helps business transition to a clean energy future. For more information, please contact Barbara or Patrick.

Feel free to use an excerpt of this blog on your own site, newsletter, blog, etc. Just send us a copy or link and include the following text at the end of the excerpt: “This content is reprinted from 100% Renewables Pty Ltd’s blog.