Friday, March 11, 2022

What is Solar PPA and Why Does Your Business Need it?

As COVID-19 becomes part of the next normal for businesses, industry leaders face challenges in the shifting economic landscape, leading to OPEX concerns, while maintaining a competitive advantage. Energy, in particular, was singled out to be one of the top three expenses for many businesses, where solar energy has proven to be a real contributor to cost-efficient savings where investments can be recouped in 3-4 years while shaving off up to 50% of operational costs.  

Understanding that solar energy has accessibility challenges as the most common financing option is an outright purchase, zero CAPEX solar solution has emerged as another common financing solution, more widely known as solar Power Purchase Agreement (PPA) where companies bear zero CAPEX, and they can purchase the electricity at a lower rate from the solar service provider than the electricity distribution company.  

With solar PPA as an emerging solar financing solution in Malaysia, discover more about it and learn more if your business needs it. 

What is a Solar PPA? 

Businesses who are looking to preserve cash flow during this time should consider a Power Purchase Agreement (PPA). Through it, businesses gain recurring and reduced electricity tariffs at zero capital expenditure (CAPEX) over a 15-20-year lease-to-own tenure. Once mature, business owners take full ownership of the solar setup and its savings benefits. 

A solar PPA is a solar lease-to-own solar financing solution where the adopter pays zero CAPEX. Aimed at optimizing cash flow, building owners can enjoy lower electricity tariff rates, saving on their monthly TNB bills. 

How Does Solar PPA Work? 

Private PPA, Corporate PPA, Solar Capex, Zero Capex

As the adopter of corporate PPA, you would only pay a monthly amount to the investor (owner of the solar photovoltaic (PV) system), allowing you to pay lower for the electricity bills. This is because you will only be paying for the monthly payments of the solar energy that was consumed from the solar system at the PPA tariff over the solar PPA tenure. 

The solar PPA option is flexible because it allows you to conduct a site sale or transfer, site relocation, site renovation and early termination possibilities. As for the operation and maintenance cost, this will be taken care of by the investor. 

The operation and maintenance (O&M) costs of the solar system are borne by the investor throughout the lease period. Therefore, adopters will not incur unexpected expenditure whilst continuously benefitting from lowered operational expenditure (OPEX).  

Eligibility for Solar PPA 

Curious about whether your business can apply for a solar PPA? Here are the eligibility requirements:  

  • Companies with high positive cash flow and low tax liability. 
  • Companies with tax holidays from the government. 
  • Companies who go green with zero CAPEX. 
  • Companies who do not want to own assets. 

Benefits of Solar PPA for Your Business

Not only will your business lower its energy bill through solar PPA but enjoy the advantages of adopting clean energy.  

Summary of the benefits of solar PPA your business can enjoy: 

  • A zero CAPEX investment that is a lease-to-own arrangement. 
  • Purchase electricity at a lower rate than the usual rate from your electricity distribution provider. 
  • System takeover where you can take ownership and enjoy free power after the contractual period. 
  • More business cash flow to spend with the immediate cost savings after the solar PV system begins generating energy from the sun. 
  • Get closer to achieving Environmental, Social & Governance (ESG) for your company. 
  • Higher roof durability. 
  • Lower your carbon footprint. 

Interested in Solar at a Lower Cost? 

If you are looking to strengthen your corporate ESG journey and lower your energy bills, Plus Xnergy provides zero CAPEX solar solutions for your business.  

Through this solar PPA solution, Plus Xnergy will finance the solar PV system of your building or factory, enabling you to purchase electricity at lower-than-grid rates for the next 15-20 years. After the tenure, the system is then transferred to your company’s ownership where you can continue to reap its benefits.   

The solar PPA solution is provided by Plus Xnergy Asset (“PXA”) is a wholly-owned subsidiary of Plus Xnergy Holding (“Plus Xnergy”), an asset management arm to invest in assets within and beyond Malaysia.  

To inquire more about this solution for your business, contact us at hello.pxh@plusxnergy.com 

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