In the market, several factors drive the adoption of installing solar panels on rooftops. Besides sustainability and an alternative clean energy solution, through networking events and conversations with prospective clients, we've found that the most impactful factor for clients to opt for a solar system is the monetary benefit — simply reducing electricity costs and, consequently, reduce in operational expenditures ranks as their top choice.
There are two common models for adapting a solar system in Singapore. One is outright purchase, where the client pays to own and is responsible for maintaining the solar system. The other popular option is the Solar PPA model. You can refer to this for a detailed comparison between these two models.
The Solar PPA model is like the current practice of signing an energy contract with energy retailers, agreeing on electricity rates and terms. By signing up for a Solar PPA, you essentially have two sources of electricity supply instead of just one. As solar systems generate energy only during the daytime, signing up for a Solar PPA doesn't replace the need for a stable electricity supply from the grid to avoid operational breakdowns. Instead, it serves as a cost-effective and clean alternative when generating energy during daylight hours.
Solar PPA offers several monetary benefits to SMEs, positively impacting their financial sustainability. Let us share some of these benefits:
The price per kWh of electricity in Singapore has nearly tripled in the last two years. While consumers often sign 1-2 year electricity contracts with energy retailers, managing fluctuating electricity costs can be a troublesome effort. Solar PPA offers flexible contract durations and provides a fixed price throughout the contract period, which can extend up to 25 years.
Saxon Renewables' lowest offer in 2023 is only around SGD 0.10/kWh, depending on the contract duration. This predictability shields SMEs from financial risks associated with price volatility, allowing them to anticipate a portion, if not all, of their energy costs without being subjected to fluctuations in fuel prices and grid tariffs.
One of the most attractive features of solar PPA for SMEs is that it doesn't require any upfront capital investments. The solar PPA developer covers the costs of hardware, system design, installation, insurance, and yearly maintenance. The client purchases the energy generated by the solar system by paying a monthly electricity cost to the solar developer. With no other costs involved other than the monthly generated electricity cost, there is absolutely no risk to the client.
Solar panels generate electricity in the presence of sunlight. During times of low consumption, such as weekends or lunch breaks, surplus energy from the solar PV system is automatically transmitted back to the grid. Essentially, SMEs become energy suppliers to the grid. The amount of energy exported to the grid is tracked, and in return, the client receives a rebate paid out every billing cycle.
The above chart shows the savings realized by a client over the first 4 months since the commencement of operation. Note that the buyback tariff closely follows the trend of monthly USEP price in Figure 1. In just over 4 months, the 440 kWp system has generated a total of SGD 5258 in savings.
Another significant advantage of the Solar Power Purchase Agreement (PPA) for SMEs lies in the maintenance of the solar system. Throughout the term of a solar PPA, the Solar PPA developer takes on the responsibility for the Operation & Maintenance (O&M) of the system. They meticulously monitor the power generated, ensuring it consistently maintains peak performance.
Managing a solar system is akin to overseeing a mini power plant on your rooftop. This means SMEs can forgo the need to invest in additional manpower, avoid hassles, and eliminate the effort required to look after the solar panels on their rooftops. Our experience indicates that systems managed directly by clients often encounter lower performance issues, as clients may not be familiar with the intricacies of how a solar system operates.
Saxon Renewables takes pride in sourcing solar panels from Tier 1 suppliers, reflecting the long-term commitment inherent in the PPA agreement. These panel manufacturers guarantee a minimum yearly generation. In the rare event of underperformance or premature degeneration of panels, clients will receive reimbursement for any lost savings opportunities. This commitment underscores our confidence in the quality of our materials, design, and operational capabilities.
If it's not abundantly clear yet, SMEs opting for Solar Power Purchase Agreements (PPA) will experience a substantial reduction in energy expenses. By harnessing solar power, SMEs can generate their electricity and diminish their reliance on grid-supplied electricity, which typically incurs costs 2-3 times higher than Solar PPA tariffs. Once the solar system is activated, the savings are immediate!
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.
