Power Purchase Agreement

A Power Purchase Agreement, also known as a PPA, is where an investor or energy company funds the solar PV system installation at your premises and you agree to purchase the electricity you use from the panels at a reduced rate.

The funder will retain ownership of the PV system until the end of the lease, this could be anything from 10-30 years. If you opt for a shorter lease the likelihood is your rate that you purchase the power for will be higher but you will own the asset faster.

Once the agreed lease has passed, the asset is then gifted to the client.

Using a PPA to fund your commercial solar installation is a great way to become more sustainable as a company, offset your carbon footprint, and benefit from green energy, however it can take several months to get an agreement in place and the solar PV system deployed.

As this is an investment for the PPA provider, they seek to achieve a return on their investment, and therefore the savings of the solar PV system are shared between yourself and the funder. As a result, the savings you stand to make over the term could be substantially more if you were to pay for the panels yourself using CapEx or Asset Finance.

If you would like to talk to us about funding your solar PV project using a Power Purchase Agreement, please get in touch and we can discuss this payment option in more detail.