One of the best-kept secrets about acquiring a solar energy system is that installing one at a commercial or government facility can be done without spending any money – ever for anything, other than for the cost of the energy actually used. It is accomplished by signing a Power Purchase Agreement (PPA) with Cedar Creek Energy.
With a PPA, the owner or operator of a property has us design, install, connect, and maintain the solar energy system. Under a contract that typically runs for 15-to-20 years, the user has zero out of pocket costs and only buys power produced at a predetermined rate. This set price only for the energy consumed by the facility is less than what would be paid to a privately-owned or public utility.
The Power Purchase Agreement is a New Twist on an Old Concept
Power lease agreements were a forerunner to PPA’s. While they are similar in some respects, there are some qualitative differences that are important.
A solar lease is much like leasing a car: The user drives the automobile and covers the cost of gas, oil, maintenance and repairs but the vehicle is owned by a leasing company. The owner or management of the facility where a solar energy system is installed leases the panels and basic infrastructure from a supplier such as Cedar Creek Energy and makes a monthly payment to cover the cost of the equipment in addition to an up-front deposit. Things such as routine maintenance and upkeep are the responsibility of the entity leasing the panels.
With a PPA, there is no initial deposit nor any cost for the set-up. Furthermore, Cedar Creek Energy is responsible for keeping the solar energy system in good working order and to respond promptly to an emergency call if there is a problem. The user doesn’t own anything and is responsible only for paying for the electricity.
Multiple Benefits of a Power Purchase Agreement
Overall, there are six key benefits to a PPA regardless of whether it is used by a company, a large residential complex or a government agency. This flows through directly to the P&L of a business or the funding and budget needs of a public body.
- No capital expenditure. The PPA puts the responsibility for any capital outlay for the panels or equipment needed to connect the solar energy system to the building’s internal grid.
- Reduced cost for electricity. PPA’s provide for a fixed, predictable price for electricity over the life of the contract which, most of the time, is considerably less than what a utility projects its rate increases are likely to be.
- No ongoing costs or training. Because Cedar Creek energy is responsible for the entire solar energy system, the user never incurs maintenance costs and doesn’t need to send its staff for expensive training so they can maintain it.
- No upkeep or repairs. When a PPA is in place, a company such as Cedar Creek Energy inspects the solar energy system regularly and performs any maintenance that might be required.
- Leveraging federal and state tax credits. The reason PPA’s are so cost-effective is that, for governments, the tax credits have no value. For private businesses, Cedar Creek Energy uses the tax benefit as the system’s owner to lower the total cost of energy paid by the user.
- Property enhancement. Whether for a home or a business, solar energy increases the property value. This can be an important consideration for the owner of commercial real estate or a multi-unit residential property.
When a business looks into using a Power Purchase Agreement to reduce its energy costs and lower its carbon footprint, often the internal approval process is relatively fast and simple. Neither a board nor a lender needs to fret over capital costs or what the system will do to the budget in future years. The cost as well as the savings are predictable.
For a government entity, management does not have to wait for the next budget cycle or hope that politicians will approve the funding request. Moreover, once it is installed, the solar energy system can be easily upgraded to accommodate growing needs if the facility is being expanded.
At Cedar Creek Energy, we have installed more than 500 solar panel systems for residential, commercial, industrial and government buildings. To learn more more about how a Power Purchase Agreement will give you a solar energy system, call us at 763-432-5261 or complete the form on our website.
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