When implementing a new solar, storage, EV charging or other sustainability project, evaluating your financing options is one of the most important first steps.
Traditionally, most commercial and industrial businesses have financed clean energy projects using cash to purchase their systems up front. But the introduction of Power Purchase Agreements have created a new, more compelling financing option for many businesses across industries.
Among the many benefits a PPA can provide, this article highlights five of the most significant benefits of a PPA over cash:
No Upfront Cost
Even if you have the cash on hand to pay for a solar, storage or EV infrastructure project, your business might be better served to redeploy that capital in support of your core business.
Instead, a PPA offers a no-upfront-cost option in which, instead of leasing or purchasing the system, you only pay for the power you use which keeps the transaction off your balance sheet.
Your company enters a long-term, third-party ownership agreement with a solar developer like TotalEnergies who takes on responsibility for operating and maintaining the system over its entire lifespan. And your business enjoys a predetermined per-kilowatt rate for the electricity the panels generate which are generally well below utility electricity rates.
TotalEnergies has a broad financing network to raise capital at the lowest cost, which in turn means a lower PPA rate and higher savings for our customers.
Reduced Risk
When you enter into a PPA agreement with TotalEnergies, we become your single partner responsible for overseeing all facets of your project from development to construction to operation. As project owners, we are as invested as our customers in the safe, reliable and productive long-term operation of our solar energy systems.
Predictable Energy Savings
Because PPAs establish a known per kWh electricity cost over the term, commercial and industrial businesses who enter a PPA are able to realize energy savings from the day that the system begins to generate energy. And because utility rates typically continue to increase throughout the lifespan of the system, businesses can leverage PPAs as a hedge against those rising costs — often realizing greater savings over time as the delta between their negotiated rate and prevailing energy rates gets wider.
TotalEnergies’ project finance capabilities enable optimization of available tax benefits and available incentives to ensure your savings are maximized. TotalEnergies’ does a thorough analysis of federal, state and local incentives, grants and other available funding sources to amortize the cost of the system, thereby lowering the PPA rate for the customer to ensure your savings are maximized. This includes taking full advantage of Inflation Reduction Act (IRA) incentives and adders to provide the most cost-effective PPAs for our customers.
Scalability and Flexibility
Choosing a PPA over cash ensures that renewable energy supply can scale alongside a business, providing a seamless transition as operations expand. This makes a PPA an excellent choice for businesses with growth in their future plans.
If energy demand increases, a PPA facilitates the ability to add more solar to align that increased demand with new generation.
In addition, if a company operates in multiple locations or plans to expand geographically, a PPA can enable a consistent approach to energy management across operations, including replicating successful projects on additional sites.
PPAs also offer flexibility should a business’ economic conditions or priorities change. Most PPA contracts include a buyout opportunity after year five. In addition, there is typically an opportunity to extend the PPA, remove the system or purchase the system at the end of the PPA contract.
Retain Environmental Attributes
Just because the solar, storage, and EV infrastructure systems may be owned by a third-party doesn’t mean the environmental benefits can’t be yours. In many PPA’s the customer retains the renewable energy credits (REC’s), carbon offsets, or other environmental attributes. Subject to the terms of a PPA, you can still realize your Environmental, Sustainability, and Governance (ESG) goals.
TotalEnergies PPA Advantage
As one of the largest multi-energy companies in the world and a recognized leader in the global energy transformation, TotalEnergies offers businesses a long-term PPA partnership model that you can count on.
We have delivered successful solar projects in the U.S. for 30 years, with 1.3 GW of projects operating across the country and a pipeline of 25 GW.
With a TotalEnergies PPA, we will be your single partner to oversee all facets of your project from development to construction to operation. Whether your available physical space is on the roof, in a parking lot, on a garage top or on open land, we have proven turnkey solutions to deliver projects tailored to your unique energy needs and business goals. As project owners, we are as invested as our customers in the safe, reliable and productive long-term operation of our solar energy systems.
To learn more, email us to schedule a conversation.