Understanding Power Purchase Agreements (PPAs): A Guide for Financing Commercial Solar Panels

If you’re a business owner or decision-maker looking to transition to renewable energy, you may be considering commercial solar as an option. While the benefits of solar energy are clear, the upfront costs of installing solar panels can be a barrier for many businesses. That’s where Power Purchase Agreements (PPAs) come in. 

A PPA is a financing option that allows businesses to purchase solar energy without incurring the upfront costs of installation and maintenance. 

In this guide, we’ll explore what PPAs are, how they work, their pros and cons, and whether your business may be eligible for this financing option. 

By the end of this guide, you’ll have a better understanding of whether a Power Purchase Agreement is right for your business and how to apply for one.

What are power purchase agreements (PPA)

What are Power Purchase Agreements (PPAs)?

Power Purchase Agreements (PPA) is a contract between a business and a renewable energy provider, such as Eclipse Energy Commercial. The provider installs and maintains the renewable energy system (such as solar panels and battery storage) on the business’s property. 

The business then agrees to purchase the energy generated by the system at a fixed rate for a set period of time.

What do PPAs enable a business to do? What are the key benefits? 

PPAs enable businesses to transition to renewable energy with little to no upfront costs. They allow businesses to access the benefits of renewable energy (such as cost savings and reduced carbon footprint) without having to invest in the solar system themselves.

PPAs enable businesses to:

  • Access commercial solar with little to no upfront costs
  • Lock in a fixed rate for energy, protecting against potential price hikes
  • Reduce their carbon footprint and show commitment to sustainability
  • Benefit from a predictable and reliable source of energy
  • Free up capital for other business investments
  • Reap the benefits of commercial solar with zero upkeep or maintenance costs

How do I know if a Power Purchase Agreement is right for me?

However, as with anything, there can be downsides. So, what are the cons of a Power Purchase Agreement? And is it right for your business?

Cons of PPAs:

  • The business does not own the renewable energy system
  • Long-term commitment: PPAs typically have a duration of 10-25 years, which may not be suitable for all businesses
  • May not work for all business types: Businesses with short-term leases or those that operate seasonally may not benefit from PPAs

What types of commercial businesses would be suitable for PPAs?

PPAs are suitable for many types of commercial businesses, including those in industries such as manufacturing, retail, and hospitality. However, businesses with short-term leases or those that operate seasonally may not benefit from PPAs, as the long-term commitment may not align with their needs.

Could your business be eligible for an Eclipse Energy PPA?

Many commercial businesses are eligible for PPAs, and when you work with Eclipse Energy Commercial we will ensure that a PPA would be right for your business’s unique needs and circumstances. 

However, there are some factors that we may consider when qualifying if your business would be eligible for a Power Purchase Agreement:

  • The amount of energy the business uses
  • The availability of suitable space for the renewable energy system
  • The business’s creditworthiness and ability to meet the terms of the contract
  • The duration of the business’s lease or ownership of the property

How to apply for an Eclipse Energy Power Purchase Agreement:

To apply for an Eclipse Energy PPA, we will evaluate your business’s energy needs, property, and other relevant factors to determine if a PPA is a good fit, as stated above.

We will then work with you to develop a contract that outlines the terms of the agreement, including the fixed rate for energy, duration of the contract, and other details. 

Following on from a successful signing of the contract, the renewable energy system will be installed on your property.

What next?

Overall, PPAs can be an excellent financing option for businesses looking to transition to renewable energy without incurring upfront costs. The benefits of PPAs, including cost savings, and reduced carbon footprint, make them a compelling option for many businesses. 

It’s important to carefully evaluate the terms and conditions of a PPA before signing, to ensure that it’s a good fit for your business’s unique needs and circumstances.

If you are interested in a Power Purchase Agreement, you can contact our friendly team here at Eclipse Energy Commercial. We will offer a free no obligation survey of your business premises. 

Just fill out a form on our website or give us a call on 01422 414850.

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