By Jakes Joubert, CEO of Red Energy
Solar power charged the business sector back to life… at least for those who could afford the upfront costs.
Now that the dust has started settling, the financial benefits are undeniable. Some businesses reached the breakeven point in less than 24 months and will very likely save millions in their lifetime. Yes, that’s right… millions.
So, what about those who cannot afford the upfront capital expenditure?
Let’s not forget to also add the monthly insurance due to the risk of theft and damages. Is there any hope for the rest of the business sector that just doesn’t have the capital?
This is where financing options diversify.
Here’s why the Power Purchase Agreement (PPA) is worth the consideration:
PPAs came into effect after legislation was passed that allowed users to purchase electricity from generators other than Eskom.
The most common method of electricity supply is through solar power. In most cases, the solar power system is installed on the premises of the customer.
The electricity supplier covers all equipment and installation costs. As one of the major selling points, the electricity supplier also carries all maintenance, insurance, and repair costs. The PPA therefore, offers the user a carefree electricity supply.
The user in turn commits to a relatively fixed monthly electricity bill based on the total generation capacity of the Solar Power System. However, the rate per kW of electricity is offered below the Eskom rate.
The actual rate is ultimately based on the required Solar Power System. In essence, the user saves on their electricity bill.
The catch is however… The contract term is usually 10 to 20 years. To some, this is an immediate “NO”. But this should not be such a concern. Solar power systems can be relocated (at a cost to the user) and in many cases, the PPA can be transferred to the new building owner or lessee (depending on approval by the electricity provider).
At the end of the day, the business operation needs electricity, and in most cases, Eskom is not the preferred supplier. The PPA is a trustworthy mechanism to secure a long-term electricity supply.
The catch?
There isn’t any. The PPA, just like any other electricity supply option, has its PROs and CONS. The aim is, however, to have every user save on their electricity bill. At Red Energy, if we cannot achieve this for a customer, we don’t do business.
If you don’t want upfront capital expenditure and any maintenance costs with a guarantee of paying a lower tariff than at Eskom, the PPA is a definite “YES”!
Solar power is still the cheapest and most reliable option. Isn’t it time you made the switch?
After more than 15 years, Red Energy is still in the solar power business and helping customers to rise above.
