With the rising urgency to address global and environmental challenges, businesses and governments have begun to seriously embrace commercial solar solutions.
While the environmental benefits are clear, the financial and energy-saving reasons for solar installations are often overlooked.
This is because, although financial advantages may be evident in the long run, there can be short-term costs that put businesses off even considering solar solutions.
This is where Solar Power Purchase Agreements come in.
What are Power Purchase Agreements?
Power Purchase Agreements (PPAs) are contracts between the customer and the solar developer whereby customers can buy solar electricity without the upfront cost of installing a solar PV system.
Types of PPAs
On-Site PPAs: A Direct Wire PPA creates a direct connection between the energy generator and consumer. This bypasses the Transmission and Distribution networks, lowering costs compared to indirect PPAs.
Off-Site PPAs: In cases where on-site installation isn’t feasible, a solar asset can be installed on an adjacent greenfield site, with the same direct-wire connection, ensuring that energy flows directly to the business, bypassing the grid.
How do PPAs with Shawton Energy work?
- Shawton Energy installs a solar asset on the business premises, either on the roof or available land. This installation is fully funded by Shawton Energy, so the business faces no upfront costs.
- The business purchases all the energy generated by the solar asset at a fixed price, with a small annual inflation adjustment, ensuring predictable long-term energy costs.
- Shawton Energy retains ownership of the solar asset for 15–25 years, handling all operation and maintenance during the contract period. At the end of the term, ownership of the asset transfers to the business, allowing it to continue using renewable energy at no additional cost.
- Typically, the solar project covers 20–30% of a business’s energy demand. For the remaining energy needs, the business will maintain an import contract with an energy supplier.
This setup provides significant long-term energy cost savings, energy security, and reduced carbon emissions, all with minimal operational hassle.
What Are the Benefits of PPAs?
There are numerous benefits to businesses brought about by opting for a PPA.
Firstly, by bypassing grid costs, businesses save significantly on energy bills – up to 30% – with direct renewable energy. The direct connection also ensures a reliable energy supply, reducing dependency on the National Grid, and facilitating energy independence.
Using renewable energy directly cuts a business’s carbon emissions, too – supporting both a company’s individual ESG goals, as well as contributing to reaching the UK Government’s net zero emissions by 2050 target.
Another added advantage of this type of agreement is that businesses don’t need to worry about ongoing operational and maintenance costs. It’s our job to proactively monitor our clients’ systems and ensure they’re performing optimally.
Finally, taking a look at PPAs through a financial lens, they provide fixed energy prices, shielding businesses from market volatility and other factors out of their control. As a result, this offers greater financial predictability and enhanced resilience.
With a fully funded PPA, there’s also no upfront CapEx or OpEx, enabling businesses to reap the financial and environmental benefits of solar, without impacting on cash flow.
Ultimately, it’s important to work with a commercial solar provider that fully evaluates all potential options for your business – giving you the peace of mind that you have the best, tailored solution to meet your company’s individual energy needs.
To find out more about our Solar Power Purchase Agreement solutions, visit our dedicated PPA webpage or get in touch with our friendly team of solar experts.
