More and more businesses in the commercial and industrial sector are opting for Power Purchase Agreements (or PPAs) because they are a low-risk, stress-free way of entering the world of renewable energy. But there is still a lot of confusion around what a PPA entails, and the risks and benefits for business owners. That’s why we’ve put together this quick guide.
What exactly is a PPA?
A PPA is a services agreement that is signed between a business owner and a solar services provider. The solar services provider owns and operates the solar PV system that is installed on a business owner’s property, and the business owner pays only for what they use of the energy that is generated by the system. In short, PPAs allow business owners to benefit from solar energy without the costs of buying, operating, and maintaining a solar PV installation.
Why a PPA?
1. Save money with zero capital expenditure
Decentral offers our clients zero capex PPAs. This means that you don’t have to pay anything upfront to start using clean solar energy. No deposit, no installation or insurance costs, and no fixed monthly fees. Plus, we handle the complexities of the EPC contract.
What you get is a top-quality installation that is guaranteed to perform.
2. A PPA lets you focus on your core business
Did you know that owning and operating your own solar PV installation is basically like managing a small power plant in addition to running your core business? A PPA lets you concentrate on what you do best while the experts take care of your clean energy needs.
With a Decentral PPA, we undertake to provide operations, maintenance, and insurance of the solar PV plant at our cost. We will also provide additional security hardware and monitoring if necessary. In addition, Decentral takes on all the risk of workmanship and equipment degradation or failure.
Your responsibilities as a customer are simply to run your business and ensure that the solar panels can do their job without interference. This means maintaining the area where the panels are mounted, minimising shading, and allowing our technical teams access to the equipment if necessary.
3. Pay only for the power that you use (cheaper than Eskom!)
Under a Decentral PPA, you pay only for the power that you actually use. This is called a “no take no pay” agreement, and it means that you start saving from day one. Our tariffs are competitive: we are able to offer customers targeted savings of 5–50% on their current energy costs. Given that the average Eskom tariff has risen 753% since 2007, these savings are only set to increase!
4. When you sign a 20-year PPA, you’re actually only committing to a 3-year contract
The term of a PPA is typically 20 years. We know that signing such a long-term contract feels daunting. Who knows what the future will bring? It’s important to note, however, that a Decentral PPA gives you options.
First, we offer a range of terms (3–25 years) and will work with you to find a length of contract that will suit your needs.
Second, even with long-term contracts, we offer buy-out options after three years that will allow you to own your installation outright. But we find that our customers generally prefer to stick with the PPA because it’s so convenient and low risk.
Finally, if you happen to sell your property or relocate, we have you covered! The agreement can be ceded to the new owner, or we can transfer the solar system to your new premises.
In sum, there is no risk from year 4, and you will enjoy the savings for up to 20 to 25 years (the lifespan of the equipment).
5. A PPA enables you to join the clean energy transition easily
Many business owners want to go greener and start using renewable energy in their operations. But doing so often seems complicated and intimidating: where do you begin? This is where a PPA can make things easy, offering a simple and risk-free entry into the world of clean energy.
If you’re interested in pursuing a Power Purchase Agreement, get in touch with us today. We’ll assess your needs and the suitability of your property for solar energy generation, and put a proposal together so that you can start benefitting as soon as possible from the financial and environmental savings that solar power provides. Take a look at some of our recent projects.