A Commercial Solar Power Purchase Agreement (PPA) is the perfect way to reduce energy bills and use clean energy with free solar panels and no upfront installation costs.
We recommend a PPA for most types of commercial buildings particularly those that don’t want to purchase the system outright. With free solar panels, a PPA can highly benefit:
- Schools, colleges and universities
- Industrial buildings – warehouses, factories etc
- Commercial buildings – offices, shops etc
- Sports clubs
- Social clubs
A PPA is a contract whereby investors in green technologies provide businesses with free solar panels with no purchase, installation or maintenance costs. The business buys the energy produced by the solar panels from the investor at a rate cheaper than buying it directly from the grid.
It is a great way to reduce energy bills and use clean energy, without the upfront costs of installing your own system.
How does a PPA work?
- We install free solar panels on your building.
- An investor, or group of investors, who want to invest in green technologies pay for the panels and installation.
- You, the building owner, enter into Agreement (usually for 25 years) with the investor to buy the electricity the solar panels produce.
- The rate at which you buy electricity varies from site to site. 9 out of 10 sites will pay less per unit of electricity from their roof than they would from the grid. If they don’t accumulate savings in the first year, they will later down the line.
- The cost of electricity in a PPA only increases at the rate of the Government-stated retail prices index (RPI) level – and not at the rate of electricity directly from the grid – so annual savings should increase year-on-year.
- The investor will monitor the installation remotely and fix any problems that may occur for the whole 25-year period of the lease.
- At the end of the lease period the investor will either remove the system or the system would become the property of the building owner.
- If you sell the building during the contract, the new owner will need to agree to sign the PPA, and in doing so, can benefit from great annual energy savings.
A PPA example:
- A printing business currently pays 12p/unit of electricity from their supplier and uses 200,000 units per year.
- Their electricity bill comes to £24,000.
- Assume that electricity costs rise by, on average, 5% per year – this is in line with Government predictions.
- IDDEA install a 50kW installation which generates 50,980 units per year, of which it is calculated to use 93%.
- The business signs a PPA which states they will pay 9p per unit from the solar panels.
- This 9p will only increase by the Government stated RPI level, let’s say for this example that the RPI rate is an average of 3%.
- The result is the business now pay £1,528 less for their electricity in the first year.
- Due to the PPA being RPI linked and not directly to the price of electricity, the annual savings should increase per year. The year 10 saving in electricity for this example is £3,960.
- In fact the 20 year combined savings are £146,542. All for no installation cost.