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What is a Solar PPA, and how could your organisation use one?

There are many types of Solar PPA – which could work for your organisation?

Renewable energy procurement is instrumental in the transition to net zero. Both the Public and private sectors can benefit hugely from an integrated energy solutions model. You could invest in integrated solutions like hydrogen-ready CHP with flexible financing – or make the most of Solar Power Purchase Agreements (Solar PPA).

With zero direct carbon emissions and potential cost savings of up to 20%, going solar could transform your energy strategy. But amid economic pressure, this can be complicated – so you may wish to explore financed solutions to preserve your cashflow. This is where Solar PPAs can help.

Whether you’re looking to generate power onsite; purchase energy from offsite; or both, we can help. As global leaders in energy management, we combine worldwide market expertise with high-quality asset deployment, operation and maintenance. Read on to learn more about your options, and how your business could benefit from them.

 

What is a Solar PPA?

Solar PPAs are long-term power supply contracts. In a PPA, you’ll procure electricity from a renewable power generator, whether through equipment installed on your site or offsite. This can help to provide you with financial certainty, as well as supporting the creation of new renewable generation infrastructure.

There are many distinct types of PPA. These range from onsite PPAs to “sleeved” and “virtual” options, helping you to keep your energy strategy flexible and offering benefits such as:

  • no upfront capital investment needed with a commercial solar PPA
  • long-term cost and carbon reduction
  • Renewable Energy Guarantees of Origin (REGOs) to support your carbon reporting
  • potential support for the funding of new renewable generation sources

 

What are on-site PPAs?

 

Commercial Solar PPA

One type of onsite PPA is a Commercial Solar PPA. Under this typically 15–20-year contract, you won’t need to provide any upfront capital investment for your asset.

We’ll design, finance, build, operate and maintain the asset at your site for the whole duration of your PPA contract. You’ll simply pay a fixed p/kWh rate for generated electricity (subject to indexation and credit check), at a price typically set lower than that of grid electricity. So, you’ll be able to secure long-term energy cost control with no upfront CAPEX investment.

These PPAs are “behind-the-meter” agreements. This means that the electricity is fed directly into your site, without the use of the distribution or transmission system. As such, you can reduce your use of carbon-intensive grid electricity– helping you to control your carbon emissions as well as costs.

Learn more about commercial solar PPAs

Private wire PPA

Private wire PPAs are another type of behind-the-meter PPA. We install solar on your excess land, or third-party land, near the site that will be using the generated electricity. The electricity is fed directly into the site through a “private wire”.

Similarly to a commercial solar PPA, we’ll design, install, finance, operate and maintain your asset. By utilising a behind-the-meter supply, you’ll be able to reduce your reliance on grid power – helping you to cut your costs and carbon emissions.

We can also help you to procure renewable supply for any electricity demand that you’re unable to meet with your solar installation. This could be through British Gas electricity supply, or with an offsite PPA.

Secure 15-20 years of cost control with a commercial solar PPA

What are offsite PPAs?

Offsite PPAs are typically sleeved or virtual PPAs. In both cases, you’ll receive Renewable Energy Guarantees of Origin (REGO) to certify that your power is renewably sourced – helping you to meet your disclosure and reporting requirements.

 

Sleeved PPAs

Sleeved PPAs, also known as corporate PPAs, are an agreement between you, an intermediary (such as us), and an offsite renewable generation source.

We take delivery of the generated renewable energy, and “sleeve” it to your supply contract. This doesn’t need to be a Centrica contract, and you don’t necessarily need to switch energy supplier.

If we are your energy supplier, we can also top-up the delivered power to meet your total demand. We’ll also provide balancing, firming and settlement functions – and ensure that your renewable supply is fully traceable with guaranteed origins.

 

Virtual PPAs

Virtual PPAs, also known as synthetic PPAs, are a form of hedge for buying and selling energy. Both you and the generator can participate, either directly or via Centrica.

Your PPA could be structured as a contract-for-difference, with an agreed strike price mechanism for generated electricity sold by Centrica. This works based on the price of power. If the wholesale market price achieved is lower than the strike price, you’d pay the difference back to us. But if the wholesale market price achieved is higher than the strike price, we’d pay the difference back to you.

Alternatively, this could be structured as an options agreement, including a price collar. This allows for flexibility in the quantity and location of loads supplied, and enables aggregate multi-site and multi-buyer models.

 

Alternative renewable supply options

Solar PPAs may not be suitable for every business, but you can still make sustainable changes to your energy strategy.

We can help you to secure renewable energy supply through British Gas, also part of Centrica plc. Our 100% renewable electricity for large businesses is independently certified by the Carbon Trust, and we’re the largest supplier to have achieved this.

Each unit of billed consumption is matched to REGOs. This enables you to report zero grams CO2 per kWh from purchased electricity using the market-based reporting method, in line with GHG Protocol Scope 2 guidance.

100% renewable electricity available through British Gas

Additionally, Centrica-funded financing can apply to solutions beyond roof-mounted, ground-mounted or car canopy solar. With Discount Energy Purchase (DEP), you could invest in next-generation, hydrogen-ready Combined Heat and Power (CHP) without the need for upfront capital investment. So, whatever the needs of your organisation, there are many options to help you to streamline your energy strategy.

 

How we can help

PPAs are just one part of the sustainable ‘toolbox’ that integrated energy solutions can offer. With our 35+ years of expertise in integrated solutions – and as part of Centrica plc’s over 200-year long legacy of energy leadership – we can help you to identify the right approach for you.

To find out more about how you can invest in an onsite or offsite PPA, speak to our experts by completing our simple form today.

Speak to our Solar PPA experts

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