A Power Purchase Agreement, or PPA, is a long-term offtake agreement between an electricity producer and a customer, for example, a company or a utility. The customer agrees to purchase electricity at a fixed price for a specific period, often 10 years or more. PPAs for electricity produced from solar or wind power are especially popular with companies. They provide a simple way to demonstrate that the electricity comes from a renewable source, reducing Scope 2 emissions and making progress toward sustainability targets.
Benefits of onsite PPAs for businesses
While PPAs are usually associated with energy from a large, grid-scale solar or wind farm, it’s also possible to get the same benefits closer to home. An onsite renewable installation— for example, on the roof of your commercial or industrial building— can be used to supply energy for your business. With an onsite PPA, you pay a fixed price per kWh for the energy produced and used on your site. Onsite PPAs therefore provide the opportunity for companies to take their energy needs into their own hands with a consistent power source at a consistent price.
The combination of an onsite renewable installation and PPA is a great way for businesses to secure a resilient and future-proof energy supply. A rooftop solar installation in a large supermarket, for example, can supply around 15% of the annual electricity demand and up to 60% of the electricity demand during peak production times. Because the price per kWh of electricity is fixed for a long period, an onsite PPA can protect your business from fluctuations and uncertainties in energy costs. Most of the power generated— between 85 and 100%— is used directly by the customer, guaranteeing a lower carbon footprint from electricity use as well as a secure supply.
Rooftop solar: The most practical onsite energy source
While there are a couple of different technology options for onsite renewable PPAs, solar is the most popular for a reason. Solar PV is a mature and cost-effective technology: it’s easy to find efficient solar modules at affordable prices, and there are now many qualified installers. Rooftop solar also requires a relatively small amount of space, starting around 150 square meters for a small installation. The modules operate silently and can be installed with a low profile on rooftops, so there are no visual disturbances— another aspect that makes them ideal for businesses.
Rooftop solar also faces very few regulatory barriers within Europe. In Germany, for example, rooftop solar does not even require a building permit. With the EU’s revised Energy Performance of Buildings Directive, rooftop solar on new and renovated commercial buildings will become a requirement by the end of 2027, meaning there are significant advantages to planning and securing installations ahead of time.
The right planner maximizes the value of your solar PPA
Although rooftop solar is straightforward to use, the setup, regulatory considerations, operations, and maintenance can be a significant challenge to understand. Onsite PPAs are a clever workaround for this challenge: they allow your business to access all the benefits of onsite renewable energy generation, without needing internal expertise. An experienced solution provider will have the technical, regulatory, and financial expertise to ensure that the entire setup and operation runs as smoothly as possible.
For many business owners working with an onsite solar solution provider, all that needs to be done is providing the roof space. Project planners can determine whether the site is already suitable for an installation and if not, which renovation steps must be taken. The load profiles and previous energy costs of the customer are also analyzed to find the optimal fit for their energy demands and budget, reducing costs in many cases. Under an onsite PPA model, the service provider takes care of not only the planning but also the operation and maintenance, ensuring that the solar installation functions with top performance throughout the contract period. With the combination of fixed energy prices and worry-free planning and operation, onsite PPAs are a simple and smart way for business owners to access clean solar energy.
Want to know if an onsite PPA makes sense for your business? Schedule a free consultation with Solnet’s experts.
