With South African businesses feeling the pressure to reduce carbon emissions and achieve sustainability goals, the demand for solar energy continues to soar, particularly through power purchase agreements (PPAs).
The grid-tied rooftop solar PV installation at Blue Valley Mall.
Michael Zorich, Sales Director at SolarAfrica, says a solar PPA is a great alternative to owning a solar power generation system. It is the solution for businesses wanting to adopt solar without having to pay any upfront Capex and where performance guarantees, insurance, maintenance and the operation of the system are taken care of.
“A PPA is a simple agreement signed between the business owner and the solar energy services provider,” Zorich explains. “It includes the installation of a solar system at no cost and removes the challenges of having to insure, maintain, monitor, operate and clean the system for years to come. The business pays for the energy used, just as it would pay Eskom or the local municipality. However, the solar tariff (kWh rate) billed is cheaper than the cost of electricity from the national grid, providing a significant sum of energy savings each month and over the lifetime of the agreement.”
As PPAs become an increasingly popular choice for commercial and industrial businesses in South Africa, property owners need to ask the right questions and understand the main differences when comparing solar energy proposals. Zorich emphasises that it’s important for customers to understand and compare the details of solar energy contracts.
“For instance, the term ‘No Take, No Pay’ means that the business pays only for the energy it uses. Therefore, it is important that the solar energy system is sized based on how much energy the business consumes and not how much energy the system can produce,” he says.
When a solar system has been sized based on energy production, the number of ‘non-operational’ business days, such as weekends and annual December shut down periods, are not taken into consideration which means the business does not use all the energy the system has produced. This results in lower savings. “It is one thing to propose monthly savings but to be able to deliver those savings consistently based on on-site consumption is the real measure,” Zorich adds.
“We conduct a full technical review and log data to determine each property’s consumption and to ensure our solar systems are accurately designed to provide the highest customer savings. It’s not always about having the cheapest solar tariff, but rather about who carries the consumption risk.”
Although the length of a PPA is typically around 20 years, with SolarAfrica business owners have the option to purchase the solar system from year five onwards, providing the option of ownership at any time during the remaining 15-year period of the agreement. Exit options are also available should a business owner wish to end the agreement sooner, due to sale of the building, for example. Flexible clauses including the option to cede the agreement to the new owner or to transfer the solar energy system to the new premises form part of most PPAs.
The possibility of a fire or hail and lightning is often overlooked until the solar panels are broken and the system is out of operation. A PPA offers business owners the peace of mind in knowing that the solar energy system on the roof is always monitored and insured, so any damage caused is fully covered.
“Capex-free solar has changed the renewable energy landscape and the way businesses are approaching their corporate sustainability objectives. With zero cost on a company’s bottom line and contributing to the overarching goal of being a more sustainable organisation, a PPA provides long-term savings, with the biggest advantage being reduced electricity costs from day one,” says Zorich.
For more information visit: www.solarafrica.com
