California Policy Changes for Businesses Considering Solar in 2024
August 21, 2023
Increasing Commercial Electricity Rates for California Businesses
September 22, 2023Lease vs PPA – Commercial Solar Financing Options
Lease vs PPA - Commercial Solar Financing Options
Many California businesses have shown that commercial solar systems are a proven investment, and as more seek sustainability there are different financing options available like traditional leases or power purchase agreements (PPA). The key differences between a commercial solar lease vs a PPA is how the system is initially financed, and then who has ownership and is responsible for maintenance of the system.
Both leases and PPAs can be viable options for any business looking to go solar without the upfront capital costs of purchasing, installing and interconnecting a solar system. The choice between the two really depends on financial objectives and ownership preferences, while keeping long-term goals in mind.
Our expert team can help you navigate these questions, contact us today to learn which would be a better option for your business – commercial solar lease or PPA?
Commercial Solar Lease vs Power Purchase Agreement (PPA) - Key Differences
Financial Structure - Lease
Through a commercial solar lease, the business pays a fixed monthly or annual lease payment for the use of the solar system. These payments are designed to be lower than the cost of purchasing electricity from the grid, offering immediate savings on energy bills.
Financial Structure - PPA
With a commercial solar PPA, the business pays for the electricity generated by the solar panels at a predetermined rate, often referred to as the PPA rate. The rate is typically fixed and may escalate slightly over time, but it is designed to be lower than the utility’s rates, providing consistent cost savings.
Maintenance - Lease
Typically the leasing company is responsible for system maintenance, repairs, and performance monitoring, ensuring that the system continues to operate efficiently.
Maintenance - PPA
The third-party provider is responsible for maintaining and monitoring the system’s performance, ensuring that it meets energy production targets as specified in a PPA.
Ownership - Lease
Ownership of the solar system remains with the leasing company throughout the lease term. At the end of the lease term, some agreements may offer the option for the business to purchase the system, renew the lease, or have the system removed.
Ownership - PPA
Ownership of the solar system typically remains with the third-party provider throughout the PPA term. Businesses usually have the option to purchase the system at the end of the agreement or negotiate a new PPA.
Should my Business use a Lease or PPA to Install Commercial Solar?
Commercial solar leases and PPAs are both strong financing options, but there are many variables that businesses must consider when considering large-scale sustainability upgrades such as; energy consumption, rooftop/ground space availability, energy storage/peak shaving, budget, local regulations/permits, utility interconnection, incentives/tax credits, system design/technology, maintenance and other long-term goals. Ultimately, businesses must focus on what is the best financial decision throughout the life of their potential system.
Each of these considerations is essential to the successful planning, installation, and operation of a commercial solar system. Engaging with experienced professionals, such as Revel Energy, can be invaluable in navigating these complexities and making informed decisions that align with the business’s energy and financial goals.
Our team has experience working with many California businesses to navigate this process – providing a full energy analysis to determine what would be the best commercial solar solution for any facility and what financing options like lease or PPA would be optimal for any business – contact us today to learn what would be the best fit for your business.
Commercial grade rooftop solar is ideal for: manufacturing, warehousing, logistics, industrial, retail, hospitality buildings and more with over 10,000 sq. ft. rooftops.
CARPORT SOLAR
Free standing carport solar generates added solar power for properties with limited rooftop space. Added benefits include shading and protection for employees vehicles.
Crucial for reducing peak demand charges. Automated to supply electricity when your panels won’t. Energy storage is ideal for businesses that incur significant peak charges.
As the popularity of electric vehicles increase, so does the demand for on-site charging. This sustainable amenity has become a parking lot fixture for competitive employers.
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Client Testimonial: Kelemen Company
Corporate Business Park in Irvine, CA has created significant electricity cost savings through commercial solar installed across the 5-building business park.
Client Testimonial: Tice Gardner & Fujimoto LLP
See how this CPA firm saved on electricity and gained valuable tax credits through commercial solar that they used to keep cash in the businesses.
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