POWER
PURCHASE AGREEMENT
A power purchase agreement (PPA) is a contract between a customer and a third-party developer that allows the customer to access the benefits of solar energy without having to pay up front capital expenses (CAPEX). Under a PPA, the developer installs, owns, and operates a solar power system on the customer’s property.
The customer agrees to purchase the electrical power generated by the solar system for a specified period (usually10-25years) at a predetermined rate and escalation. This means that the customer locks in a fixed electricity rate, which can protect against rising energy costs and provide long-term cost savings.
The developer is responsible for the operation and maintenance of the solar system, which reduces the burden on the customer. PPAs are particularly popular among commercial and industrial customers who have large energy demands and want to access the benefits of solar energy without having to invest in a solar system themselves.
It’s important to carefully review the terms and conditions of a PPA before entering into an agreement. Seek professional advice to ensure that the PPA aligns with your energy needs and financial goals.
Example
Current electricity tariff – R2.36/kWh
PPA tariff – R1.60/kWh @ 6-7% escalation
RENT
TO-OWN
Rent-to-own financing is a solar financing option that allows you to install solar without having to pay upfront capital expenses (CAPEX). With this financing model, buyers can put down a deposit and make monthly payments over a specified period. At the end of the payback period, ownership of the solar asset transfers to the client.
Under this financing model, the buyer is typically responsible for the operation and maintenance (O&M) and insurance of the solar system.
Rent-to-own financing is a popular option for businesses and homeowners who want to access the benefits of solar energy while spreading out the cost over time. It’s important to work with a reputable solar financing company and seek professional advice to ensure that the financing model aligns with your energy needs and financial goals.
SOLAR / ENERGY
LEASE AGREEMENT
A solar lease is a contractual agreement between two parties where one party leases a solar facility owned by the other party. The contract outlines the terms and conditions under which the lessee is granted access to the solar facility, while the asset owner receives regular payments for a specified period. The funder is fully responsible for the operation and maintenance (O&M) of the asset, as well as its insurance.
Leasing a solar facility, similar to a power purchase agreement (PPA), can provide immediate savings on electricity costs, but usually for a shorter period of time. The asset remains the property of the funder for the full duration of the contract, with optional buy-out clauses. This means that the lessee does not own the asset and cannot claim any ownership rights or benefits.
Solar leases are a popular option for businesses and individuals who want to access the benefits of solar energy without the upfront capital costs of purchasing and installing a solar system.