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Solar power purchase agreements (PPAs) are a popular financing option for those looking to start solar projects with no upfront costs. PPAs typically allow a Solar Developer such as ENGIE, to handle the design, financing, installation, and maintenance of a solar energy system on a customer’s property. The developer then sells the power generated to the customer at a fixed rate, with the profit made paying for the installation over time while saving the customer money.

Such an arrangement is usually very attractive for building owners. On top of lowing the building’s carbon footprint, other key benefits of Solar PPA include:

  1. Owners pay zero upfront cost with no capital investment, paying only for the electricity they use. This can free up budget for core business activities.
  2. Power is provided at a fixed price with a hedge that ensures price certainty, regardless of fluctuations in the electricity market.
  3. Cost savings can be enjoyed by owners, especially when electricity prices are spiking much as they have been in recent months
  4. Expert operation and maintenance of the solar installations provided by the developer, eliminating manpower costs, and providing peace of mind for building owners.

The benefits to building and facility owners of adopting solar power are substantial. A typical PPA agreement usually lasts for 15 to 25 years and within this period the developer is fully responsible for the operation of the solar panel and ensuring the consistent delivery of electricity. At the end of the agreement, the solar systems is transferred to the building owner, or can be removed and the roof reinstated, at zero cost to the building owner.

Off-site PPA as an option

PPAs are considered off-site when the power generation equipment is not installed on the customer’s premises. Off-site PPAs provide customers another option for long-term cost affordability when on-site solar is not feasible. They also allow more flexibility in scaling solar solutions, making access to renewable energy sources beyond the scope that can be supported by on-site solar, possible. This can be particularly appealing for sites with high energy demands but limited space.

One example of an off-site PPA is the Large-Scale Solar Scheme (LSS) introduced by the Suruhanjaya Tenaga Malaysia (National Energy Commission) in Malaysia to help the country increase electricity generation from renewable energy. Based on the scheme, a utility-scale 21-year power purchase agreement was signed between Tenaga Nasional Bhd, one of the largest utility companies in Malaysia, and a joint venture between ENGIE and TTL Energy Sdn Bhd. The agreement covers a total installed capacity of 136MWp and is targeted to commence commercial operation in 2022.

Due to the long-term commitment required by PPAs, it is vital that the right solar developer is selected for a PPA agreement. Apart from a competitive fixed rate, it is also important to choose an experienced solar developer with strong financing capabilities and technical competency, as well as the highest safety standards, to ensure smooth implementation, operation and maintenance.

If you are interested in finding out if rooftop solar is a viable option for your building, you can contact us here.