While the long-term energy savings are obvious, you’re probably concerned about initial capital expenses. Here are three of the most common ways businesses pay for their solar upgrade.
Purchase the System Outright
As always, you can pay for your solar upgrade upfront which is essentially like prepaying 20+ years of electricity bills. If you have the upfront capital, and you don’t want to have to worry about ongoing utility expenses, a cash purchase may be your best option. At the same time, if you ever decide to sell your building, you have a valuable asset that can attract a new market of potential buyers while adding lasting value to your building’s market price.
Finance Your Solar Energy System
You also have the option to finance your system through a credit lender. Frequently, the money you save on electricity each month offsets these monthly payments, so you can expect positive cash flow from day one.
Enter a Solar PPA
A solar power purchase agreement (PPA) gives your business access to renewable solar power at a fixed cost without requiring any initial investment. Your business partners with a solar provider who installs and maintains a solar energy system at your facility.
As part of the PPA, both parties agree on a fixed electric rate that you then pay, similar to a monthly utility bill. However, PPA electricity rates are usually substantially lower than conventional energy rates and are fixed to hedge against rising energy costs. At the end of the PPA term, you have the option to buy the system outright, continue the PPA on new terms, or let your solar partner dismantle the system.
Solar PPAs are an excellent option for businesses that are interested in exploring the possibility of solar energy but don’t want to absorb any risk.