Published
January 24, 2025
Choosing to invest in solar PV systems for your business involves a significant financial outlay. When looking into finance solutions, you may have seen the term “solar panel power purchase agreements” and are wondering what this means.
Here we’ll explain how PPAs work, the business benefits of using them and other financing options available for solar system purchase.
What is a Power Purchase Agreement?
A Power Purchase Agreement (PPA) removes the need for any upfront costs of your solar PV system installation and maintenance. The developer you choose to use for the design and installation of your solar PV system will also finance the project either directly or via a third-party fund. This means they will have ownership of the system for the duration of the PPA and take responsibility for maintenance, insurance and any performance risks.
The only thing you will need to pay for is the energy generated from your system which will be sold back to you by the finance provider. The price per kWh for energy purchased through the PPA arrangement will be very significantly below the prevailing grid rates, providing substantial savings. Overall, it is an ideal solution for businesses looking to invest in solar energy without the upfront capital expenditure.
What Are the Benefits of Solar PPAs?
So, why should you choose a power purchase agreement to fund your solar PV system? Let’s take a look.
Significant Cost Savings
The immediate savings you will make from zero upfront costs, together with the reduced and protected energy prices, maintenance fees and even insurance, results in an improved cash flow for your business. As a result, you will be able to fund other business priorities knowing your solar panel installation is covered.
Enhanced Sustainability Commitment
By taking the leap and investing in this sustainable and renewable energy source for your business, you are solidifying your commitment to sustainability. With the generation of your own green electricity, you will reduce your carbon emissions and build your reputation as a sustainable business – a key factor for many of your stakeholders.
Flexible Contracts
Although contract terms will vary with each funder, they will typically be long-term, between 10-25 years, which guarantees predictable energy costs for the future and protects your business from market fluctuations. Contracts are also usually transferable, so if your business moves premises, the PPA can be transferred to new occupants. Plus, at the end of the contract, you will have the option to extend the PPA, remove the solar PV system or purchase the system outright, so you have full ownership.
What Are Other Financing Options for Solar?
If you’re looking to explore other financing options in your decision to go solar, there are alternatives to solar panel power purchase agreements available. At Noble Green Energy, we also offer asset finance and hire purchase which you can find more information about on our Solar Finance page.
Whether you’ve done your research or need assistance finding the best solution for your business, our expert team will take your business goals and work together with industry leaders to determine the ideal financing option.
Get in touch with us today to discuss your requirements and to take the first step towards your sustainable future with Noble Green Energy.
