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.
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.
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.
Typically the leasing company is responsible for system maintenance, repairs, and performance monitoring, ensuring that the system continues to operate efficiently.
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 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 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.
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.
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– 30K DATAPOINT ENERGY AUDIT
– CUSTOM TAILORED SYSTEM DESIGN
– COMMERCIAL GRADE
– CSLB #1106092
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