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 Power Purchase Agreements for solar PV systems can be confusing at times. That’s why we have put together these answers to some of the most frequently asked questions about a Decentral PPA.
Please see our blog post ‘Five Reasons to Sign a Solar Power Purchase Agreement (PPA)’ for a detailed answer.
We sell power on a “no take, no pay” basis or on a “pay as you go” basis. This means that we will only charge you for the power that you consume. Decentral Energy takes the consumption risk.
Put simply, we undertake to sell you cheaper power during the day, and include a term in our PPA that protects you from ever being charged more than the grid tariff. In the unlikely event that Eskom or the municipality manage to reduce tariffs, we will offer you a better tariff, or, in the worst case, remove the system. In the unlikely event that legislation changes and affects the business case for our model, this is also at our risk.
We provide a performance guarantee. We cannot provide a guarantee of the savings as we cannot predict what Eskom or your municipality’s escalations will be. However, we do have recent data to work with as well as the fact that we take a conservative view. This means that you should always see better savings than what we have projected. The solar PV tariff escalates at a CPI-linked rate and, based on recent figures, the grid tariff escalates at 10–15% per annum, which will equate to exponential growth in savings for at least the next 5 years.
A PPA is not a new concept, and the solar PV systems are highly engineered power generation facilities. The projected savings and our performance guarantees are based on many years’ worth of data on the weather and technology, and the system’s lifespan is up to 25 years. In effect, we own the “power station” that is on your roof and look after it. We cover insurance and maintenance, and equipment warrantees are included for up to 20 years. We are liable for the system’s performance. So, if we don’t perform, we can’t bill. If we can’t bill, we don’t get the return on our investment.
The initial 3-year period is the minimum term and there is no exit during this period. Exit after year 3 is by way of buyout (the details will appear in your PPA proposal). However, should you sell the property or should your business close down, then it is Decentral Energy’s risk. We will cede in the case of a sale of the property and down the line in the event of the business’s closure or failure.
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.
