Power
Purchase Agreement

SRM can supply Solar PV installations on non-domestic
buildings under a Power Purchase Agreement (PPA)
free of charge! They are particularly suited to settings
where the building’s owner and occupant are one and
the same, and an “off balance sheet”, capex-free solution
appeals.

However, they can also be arranged in a tripartite
agreement between supplier (SRM), the building owner/
landlord, who wants to enhance their building, and the
tenant who wants to reduce their energy costs.

A PPA is a contractual relationship between the PV system
supplier (SRM) and the building’s owner. SRM will design,
supply and install the system, free of charge. As per the
Agreement, it remains SRM’s property but obviously it
resides at the owner’s building indefinitely. The building
owner agrees to lease the roof space required for the PV
array, while the occupant agrees (under the terms of their
updated Tenancy Agreement) to purchase electricity used
from the PV system ‘on demand’ from SRM which will
always be at a rate significantly below what it would have
cost from the grid.

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What’s in it for each party?

  • The building owner gets a major enhancement to their
    asset that will appeal to current and future tenants.
  • The occupant/bill payer gets the bills reduced by having
    a blended supply of lower cost PV power, topped up by
    the grid (at prevailing rates) when necessary.
  • SRM are paid for the on-site power used by the occupant, plus any excess that is exported to the grid. This income eventually pays for their capital cost of their installation. How long this takes is SRM’s risk!

It is SRM’s responsibility to design the system to satisfy as
much of the occupant’s demand as possible; either directly
from the PV array or the ESS battery. There will inevitably
be times when grid electricity will have to be drawn when
on-site demand out-strip available on-site supply, but our
aim is to minimise this.

So, to summarise, if you own or occupy a commercial
building with a suitable roof, SRM will potentially fund and
manage the entire installation of your commercial solar PV
system, allowing your business to enjoy all the benefits of a
solar PV solution with no financial risk.

All that’s required is a suitable site for the installation,
a willingness to enter into a PPA, and a simultaneous
agreement between Landlord and Tenant to update the
Tenancy Agreement accordingly.

And finally, if in the future you opt to buy the system from
SRM, that’s fine; there is a buyout option within the PPA
that can be enacted at any given time.

Government forecasts for electricity price inflation are
currently at 7% per annum. This level of inflation equates
to your bill doubling every 11 years. However, recent trends
and forecasts are rather more onerous.

With no upfront cost, or ongoing fees, opting for a power
purchase agreement (PPA) for your business will make savings
from day one; and continue to benefit for the full term
agreed.

Once the agreed term ends, ownership of the system
transfers to you to allow you to continue enjoying free solar
electricity for the remaining life of the system.

The PPA Process

    1. SRM needs to scrutinise on-site electricity usage and survey the building to enable us to model the system and potential savings.
    2. We provide a bespoke design to illustrate the generation characteristics and potential savings. This is the same design regardless of how the system will be funded, either via a PPA or purchase plan.
    3. We provide advice on energy-saving technology that may provide a supplementary benefit to the solar system.
    4. If you wish to proceed with a PPA agreement, SRM leases the airspace above the roof from the building owner and enters into the Power Purchase Agreement (PPA) with the occupier (who may be one and the same).
    5. We install the solar system together with a suitable energy storage solution if appropriate.
    6. For the 25-year duration of the PPA, discounted power will be provided on-site.
    7. SRM will remotely monitor and maintain the installation throughout its lifetime at our expense. We will also cover insurance for the installation itself.
    8. After 25 years, ownership of the system transfers to the building owner, who then takes the full financial benefit of the on-site generated power for the remainder of the system’s life – typically another 10 years.

FAQs for Building Owner-Occupiers

What costs do I pay upfront?
Nothing – we pay for the entire system and its installation and commissioning.

What is the Term of the Agreement and How Can it be Terminated?
25 years. Termination options exist within the PPA that would generally require the building owner to purchase the system at price calculated per the mechanism within the PPA.

What if the Building is Tenanted?
Separate Tenants are not party to the PPA. The lease agreement between Landlord and Tenant will need to capture the requirement for the Tenant to pay the owner of the solar system for the power consumed from it. As this will always be well below grid prices, this helps to attract and retain tenants.

What about Insurance?
SRM will insure the physical system, but the host building will continue to be insured by the Owner, who will need to obtain agreement from their insurers accordingly. Similarly, if the building or any part of it enjoys a warranty, such as from a roof system installer, they too will need to be consulted.

How is the Price of the Solar Generated Power Determined?
We can either agree a fixed term tariff, with increases linked to RPI and breaks at fixed intervals, or a variable tariff set at a percentage substantially below the prevailing market rate from a nominated grid supplier.Therefore, it is at SRM’s risk if future grid prices fall.

What if the system develops faults?
SRM will remotely monitor the system’s performance and health. Any faults are SRM’s responsibility. Should outages occur, the building will be supplied from the grid. SRM will be obviously incentivised to keep this to a minimum by attending to faults promptly. Furthermore, when major components such as invertors or batteries reach end of life, SRM will replace these free of charge.

What if we want to sell the Building?
The PPA will be a selling point for prospective buyers. However, within its Terms, the PPA will stay in place with the building and future buyers will need to agree to it and continue to benefit from it. Alternatively, the termination process can be undergone by either buyer or seller purchasing the system at the price determined within the PPA.