Finance a solar plant, photovoltaic installation without initial investment
Many of the queries we receive in Enertika revolve around how to finance a solar plant, the answer is not unique or universal, so let’s see the most recurrent options. We will talk about three types of financing: turnkey investment, renting and leasing (or, probably it will sound more familiar to you, PPA contract). So, let’s get to it!
Turnkey investment; all yours from the beginning
The first of all is the simplest because it requires few formalities and the contracts are relatively simple because it does not involve intermediaries, i.e. financial or banking entities. The turnkey project is summarized in the fact that the client assumes the entire cost of the installation from the beginning and pays in short installments indicated in the contract. Normally, the payment installments are divided into four: a part of the total at the signing of the contract, another at the beginning of the work and another at the end, and the last one after the legalization and start-up of the self-consumption installation. In addition, it is highly recommended for communities of neighbors and homes, since its budget is significantly lower than that of companies and, therefore, more affordable.
- To get the most economical price, you can ask for bids to different companies, which will make an initial feasibility and profitability study and design by the engineering team. If you are interested in a quotation, do not hesitate to contact us.
- You will be the owner of the solar plant once it is legalized and all payments have been made. Although it is true that you must have the budget of the photovoltaic installation from the beginning because the payments are short term.
- The fastest and most independent option. Without ties with the company and without the intervention of third parties in the procedures. The solar plant will be in your hands from its start-up and will depend solely on you. But keep in mind that the maintenance of the photovoltaic modules is not the responsibility of the installer, but you will have to hire a company that offers the service.
Renting: property of the company, the installation in its hands
As the name itself indicates, leasing basically consists of renting solar panels to an installation company. Thus, the company is the owner of the self-consumption installation. The contract specifying the financing conditions will be agreed between the client and the installation company together with its collaborating financial institutions.
Side a of the renting coin is its convenience, since, as the installation is in the hands of the installation company and is its property, you do not have to worry about anything, just make the agreed payments. On the other hand, the b side of the renting coin is that the amortization or return on investment takes longer and it takes longer to see the results.
Finance a solar plant without investment or what is leasing
Leasing is a far cry from renting. And it can be distinguished according to two factors: ownership and financing. In other words, the distribution company is responsible for financing the solar plant and starts as the owner with the aim that after the term of the contract, which is usually 10 years, the customer pays for the installation and becomes the owner. Obtaining the budget for the plant is simple, since during the contract period the plant is amortized and, therefore, significant savings are achieved.
That boils down to one premise: how to finance a solar plant with no upfront investment and make it your own. It’s an ambitious goal, but it’s easier than it sounds with the PPA contracts we’ll talk about next.
PPA contract, the best option for companies
Power Purchase Agreement (PPA) contracts are ideal for companies and industries, as they usually require larger solar plants and, therefore, more investment. With these contracts, the distribution company is responsible for financing the self-consumption installation during the first 10 to 15 years, during which the customer will save and at the end of the contract will be able to pay off the loan and become the owner. In the meantime, the distribution company will offer the customer monthly energy at a fixed price from 100% renewable sources. If you want to know more about these contracts click here for a more complete article.
Below you can see an example of a PPA contract that Enertika has made with Nestlé in its factory in Reus. In addition, apart from entrusting us with their solar plant for 10 years, they have awarded us a second self-consumption installation project in their other factory in Miajadas.
Enertika offers turnkey projects and is an expert in PPA contracts, so if you think that any of these financing modalities may fit with your company or home, do not hesitate to contact our team who will be at your disposal for any questions, and if you are interested, to offer you an initial feasibility study comparing both modalities so you can see which one is best suited to your situation.