Solar Power Purchase Agreement (PPA) is an agreement between a solar developer and an organization's premises. The solar developer finances, installs, operates, and maintains the solar PV system on the premise's rooftop.
The organization purchases the solar electricity generated for their own consumption at a lower rate than the prevailing tariff throughout an agreed PPA tenure. Rest assured, this will not disrupt your existing contract with utility company or cause any energy supply shortages.
How does a Solar PPA work?
An organization has the flexibility to enter a PPA with a solar developer for a term spanning from 5 to 25 years. The solar developer will install solar panels on the organization's rooftop. customizing the system size to fully utilize the rooftop space and electrical capacity of the premise.
In cases where the solar panels generate surplus energy beyond the premises’ consumption, those additional kilowatt hours are exported to the utility grid. The advantage of PPA lies in leveraging the net metering benefits provided by your utility, enabling you to receive rebates (for open market customers) or offset your utility bill (for SP customers).
The PPA contract typically offers a rate lower than the utility's electricity rate. Consequently, the electric bill from the solar developer will be lower than what you would have paid to your utility company.
If you need more electricity than the solar panels can generate, the grid will supply according to your needs. This means that you will have two electric bills:
- A bill from your utility company for the energy you consumed from the grid
- A bill from the solar developer for your PPA
How much can you save with a solar PPA?
The amount that you will save on electricity costs with a solar PPA varies, depending on:
- Your energy usage
- Your current cost of energy
- The solar tariff established in the PPA contract
Let's say you signed up for a PPA at $0.10/kWh of solar electricity, while your utility company charges $0.15/kWh.
If you consume 1,000 kWh, instead of paying 1,000kWh x $0.15 = $150, you pay 1,000kWh x $0.10 = $100.
In essence, you end up saving $50 on electricity costs with a solar PPA.
What are the benefits of a Solar PPA?
Solar PPAs let you enjoy renewable energy benefits, like lower electricity bills, without having to pay for upfront costs or maintenance associated with adopting solar energy.
You will also be able to take advantage of net metering and receive monthly rebates.
Moreover, with a solar PPA, you benefit from predictable energy pricing because your contract specifies your fixed tariff. On the other hand, your utility company can raise your electricity tariff at any point of contract renewal without warning.
Because you don't own the system, you won't need to concern yourself with regular maintenance or performance monitoring. Instead, the solar developer with will handle these tasks.
Common FAQs on Solar PPA:-
- How much does it cost to sign up for PPA?
Absolutely No Capital Investment Involved! There are no upfront costs upon confirming the installation. In fact, Solar PPA customers will experience positive cash flow from day one.
- How much is the maintenance cost for the solar PV system?
Zero cost, guaranteed! We take care of everything, including insurance. Our team handles daily performance monitoring, spare part management, solar panel cleaning, and warranty claims (with 1-to-1 exchange).
- How much do I save per month after installation of solar PV system?
Solar PPA can help save up to 80% of a premise’ overall electricity cost. The exact savings are subject to the available roof space for solar panel deployment.
- How long is the entire process from agreement to system turn on?
We estimate a smooth 6-month timeline with electricity savings beginning after this period. Rest assured, your business operations under this roof will not be impacted.
- What happens at the end of the contract period?
Once the Solar PPA contract expires, ownership of the system will transfer to the business owner. Alternatively, the customer has the option to renew the contract.
Saxon Renewables
With a presence in seven countries (Singapore, Malaysia, Indonesia, Thailand, Vietnam, Philippines, and Taiwan), Saxon Renewables is well-positioned to enable local businesses to achieve their ‘net zero emissions’ goal by 2050.
Our solar power purchase agreement (PPA) model makes solar energy accessible and affordable for commercial and industrial organizations. Business owners can benefit from our hassle-free service, which includes tailored designed to suit your rooftop, operational and maintenance services, all parts warranty, insurance, and a guaranteed minimum of electricity generation. With no upfront investment required, business owners can start saving on electricity costs as soon as the solar system is activated.
We welcome you to contact us for more information and assistance on your solar power purchase agreement.
