SAVE: The graph represents potential savings to a business installing solar with a PPA for $0.If the prospect of installing Solar to your business premises leaves you torn between the logic of saving on your future power bills and the upfront expense of purchasing and installing solar panels and batteries, then read on.
PPA’s or Power Purchase Agreements, as they are formally known, are changing the energy conundrum for many businesses, giving some welcome relief to cash flow and enabling long term savings on business overheads.
With $0 to pay up front, the agreement enters purchasers into a contract that provides solar energy at a much cheaper rate than is available through energy retailers.
The agreements generally average between 7 and 15 years and offer some impressive savings for the businesses that enter into them.
“These agreements are fairly new, yet are proving popular for businesses as it allows them to manage cash flow and save on bills.
“Italso ensures they stay protected from future rate increases from retailers,” explains Adam Dalby, Managing Director of Solar Australia.
So who does it work for best?
Dalby says that while it’s most likely to suit larger businesses, the benefit to cash flow is often hard to overlook for smaller firms.
Any business that has fluctuating cash flow stands tobenefit.
It works for businesses that lease or own the building they operate from also.
In the instance of a client moving premises, the agreements provide a six month period for them to organise another tenant to move in and start benefitting from the PPA and savings with Solar.
“It’s actually a great way to attract tenants,” he adds.
“It allows the tenant cheaper power bills and the cost to the property owner is $0.”
The savings are certainly not to be sniffed at.
For a current business signing up for a 50 kilowatt solar system, the annual savings are around $7,673 per year.
This can fluctuate depending on businesses current energy charges.
At the end of the agreement, the business then has the ability to purchase the system for $1.
While a Power Purchase Agreementmay not work for every business size and structure, ityet again highlights justhow the Solar industry is evolving into a solution that’s becoming increasingly harder for us to ignore.