SOLAR LEASING/ PPA MODEL
HOW DOES THE ROOFTOP SOLAR LEASING MODEL WORK ?
Customers with high electricity consumption rates but having constraints on Capital Expenditure funds can opt for these models. As a consumer you should have a rooftop or available land on which the system can be installed.
Solar leases akin to ‘renting’ and solar PPAs (Power Purchase Agreements) akin to ‘buying’ are innovative ways to lower energy expenses.
You enter into a ‘rental’ agreement with the solar leasing company that entitles you to the benefits of the system (i.e., the energy that the solar panels generate) for the term of the contract, which is generally around 20 years.
Or you enter into a PPA and agree to ‘buy’ the power at an agreed rate.
Consumers can benefit from savings through lower electricity rates which is 10-15% lower than the utility company monthly bills.
Solar leases and solar PPAs: what's the difference?
While the terms “solar lease” and “solar PPA” are used interchangeably and are very similar in practice, there is a key difference between the two.
With a solar lease, you agree to pay a fixed monthly “rent” or lease payment, which is calculated using the estimated amount of electricity the system will produce, in exchange for the right to use the solar energy system.
With a solar PPA, instead of paying to “rent” the solar panel system, you agree to purchase the power generated by the system at a set per-kWh price.