What is a solar PPA?

November 16, 2021

What is a Power Purchase Agreement or PPA?

You might have heard the term PPA thrown around in the media lately.

But what actually is a Power Purchase Agreement?

There are two types of PPA and the basic concept is the same in both cases – the client purchases electricity generated by a solar system at a reduced price, while the system provider is responsible for financing, operating and maintaining the system.

A Corporate PPA – or “Virtual PPA.” This is where the customer agrees to buy renewable energy from an off-site source such as a solar or wind farm.

On the other hand, a behind-the-meter PPA is where solar is installed on-site and the power generated by the system is used within the business before connection to the market.

 

How a PPA works

So how does it work? Generally, an energy audit is conducted as the first step. This can detect a whole range of avenues in which you can save money before renewables are even thought of.

Following this, your electricity bill gives the provider the rest of the information required.

From there, the system provider will run detailed calculations based on usage and the term of the PPA, producing a c/kW rate and projecting the savings over the life of the agreement.

These types of agreements have been around in Australia for a few years now, with system providers now seeing significant benefits in offering them to small and medium sized businesses.

After all, over 2.1 million small businesses operate in Australia – that’s a lot of roof space!

 

Benefits of a Power Purchase Agreement

With electricity prices continuing to rise, a PPA gives you the benefit and peace of mind of fixed pricing – and you can save a whole stack of money too.

With a minimum of 20% savings on your electricity bill and no outlay, what business wouldn’t want one?

On top of cost savings, reduced environmental impact is of course the added benefit of turning to renewables for your energy requirements.

According to a report by Beyond Zero Emissions, if Australia’s Manufacturing Sector were to switch to renewable energy, we could reduce national greenhouse gas emissions by 8%.

Imagine the effect if we could achieve these types of results across other sectors!

Today’s customers expect companies they spend with to be making a positive impact on the environment. Therefore, adding renewable energy to your business – whether you buy it outright, under a PPA with solar on your roof or via a virtual PPA – is a smart business move all round.

Could a PPA benefit your operation? We’d love to chat about how much you could save with a PPA from NDF Energy Systems

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