Solar PPAs: Renewable energy for your business with no up-front capital cost

If your business is committed to carbon reduction and has roof space or land for solar panels, but doesn’t have the upfront capital for installation, then a solar Power Purchase Agreement (PPA) could be an option to explore.

A solar PPA is a way that your business can access renewable power without significant upfront cost. Solar panels are installed on your premises and are owned and operated by Shell Energy, which sells the power back to you through a PPA. The asset sits behind the parent (or gate) meter at the site, which enables you to reduce your electricity consumption from the grid, and associated retail electricity, environmental and network charges¹.

How do solar PPAs work?

Power generated under solar PPAs is sold to the customer, often at cheaper rates than grid-sourced electricity.
The cost reduction to your business depends on the term or length of the PPA, with PPAs typically ranging from 10–25 years. At the end of the agreement, you can choose to extend the contract, purchase the system outright, or have it removed at no expense.

Solar installation types

Solar can either be installed on a rooftop or on the ground, provided it can connect behind the meter and meets other technical requirements.

In most cases, customers opt for rooftop systems due to space constraints in urban locations. Ground-mounted solar can be an option for high energy users with a lot of land, such as regional manufacturers, mining and food processing facilities.

Solar PPAs and Renewable Energy Certificates

Solar PPAs can include purchase of Renewable Energy Certificates (RECs) that help you achieve emissions reductions goals or even generate additional income.

Solar energy systems with a capacity of less than 100kW are entitled to Small-scale Technology Certificates (STCs). STCs are calculated based on expected energy output over a period of time. Through this system, Shell Energy receives a discount and this is passed onto customers as a reduced PPA rate. This means the initial per kilowatt cost is less than that of larger systems. One STC is equal to one megawatt hour of renewable energy generated or displaced by the solar system.

Systems with a capacity of more than 100kW may be eligible to apply for accreditation as a generator and create Large-scale Generation Certificates (LGCs) for electricity generated by added capacity. One LGC is created for every megawatt hour the solar system produces annually. This is based on actual energy production rather than a calculation like STCs.

How can a solar project work for your business?

Financial

• Selecting the right PPA term and provider can enable positive cash flow on day one for your business. PPAs can avoid upfront capital project costs and the price you pay for electricity generated from on-site solar power will generally be less than retail contract rates for electricity sourced from the grid.
• Solar PPAs don’t typically affect balance sheets or borrowing capacity the same way that a solar lease or loan would, freeing up capital for further energy efficiency upgrades.
• Using electricity generated from on-site solar will reduce your business’s demand for energy from the grid, also reducing charges based on your consumption from the grid such as network and environmental charges¹.
• Shell Energy is responsible for all costs associated with the construction, operation, maintenance and monitoring of the solar system.
• Predictable energy pricing – your business can agree to a predetermined rate to assist with forward planning and budgeting, and to protect itself against price rises.
• No system performance or operational risk. Shell Energy monitors and ensures the efficiency and reliability of the solar system.

Environmental

• Reduce carbon emissions. Your business can use electricity generated from the solar panels to reduce carbon emissions and meet renewable energy targets.
• Simplify environmental reporting. Track, measure and report on your business’s energy performance.
• Demonstrate environmental responsibility to employees, customers, investors and other stakeholders.

Coupled with a solar energy management software, such as Shell Energy’s EMC platform, real-time emissions and costs benefits can be tracked for easy reporting against environmental targets.

Using the software, your business can demonstrate a strong return on investment by verifying immediate project outcomes and continually tracking energy metrics.

Shell Energy’s EMC software can be included under the PPA arrangement to assist with the identification, development and implementation of further energy efficiency, electrification and energy storage onsite projects.

Shell Energy’s experts can guide you on the best option for your business. Reach out via [email protected].

¹Retail energy charges, network charges and environmental charges that typically make up part of your energy bill.