How to finance your commercial energy project with Power Purchase Agreement (PPA)
Our Power Purchase Agreement (PPA) explained
At BHESCo, we offer a PPA financing solution to commercial customers that has allowed many enterprises to bring their clean energy projects to life.
Our PPA removes the need for UK businesses to fund their project with upfront capital or CapEx investment and allows you benefit immediately from cost and carbon savings.
We use our in-depth solar energy project experience and expertise to produce a data-led economic model, which can also facilitate your business case and financial planning.
What makes our Power Purchase Agreement unique?
BHESCo is a social enterprise whose primary missions are:
- To drive down energy costs and power our economy with clean energy
- To drive down carbon emissions and reach net zero targets
We do this by installing energy saving and renewable energy technologies at no upfront cost to our customers.
The upfront capital expenditure (CapEx) of projects is met by our network of investors who want to use their money to address the climate crisis.
The upfront cost of project is repaid to our investors over a number of years through the sale of renewable electricity/ renewable heat to the project customer.
Is a Power Purchase Agreement right for you?
We’re looking to partner with organisations who want to drive down long-term energy costs and carbon emissions with the help of our innovative financing.
If you’re interested in engaging BHESCo to design, install and potentially finance your energy project then please complete the short contact form and a member of our team will get back to you soon.
How it works - How our Power Purchase Agreement (PPA) can deliver long-term affordable, clean energy for your business
Project Development and design of Power Purchase Agreement
BHESCo’s Power Purchase Agreement can be utilised to finance solar, heat, and energy efficiency projects.
Here is an example of how it works for a solar power project…
1. Energy survey
BHESCo conduct a site-survey and analyse our customer’s historic energy bill data to understand existing levels of energy consumption. https://bhesco.co.ukcommercial/energy-survey-consultancy
2. Select an installer
BHESCo issues a tender to our network of local solar panel installers and selects the company that offers the best value for money.
3. Draft Power Purchase Agreement
Taking into consideration a comprehensive range of contributing factors and data sources, BHESCo draft a bespoke Power Purchase Agreement on behalf of the customer, offering to sell solar electricity produced by the solar array at an agreed price per kilowatt hour.
Contributing and inter-related factors affecting the electricity PPA price may include:
- The anticipated electricity generation output from the solar array
- The sum of all installation costs
- The anticipated volume of electricity consumed on-site
- Project management costs
- System monitoring and reporting costs
- Maintenance costs
- Insurance costs
- Income from the sale of exported electricity to an energy supplier
- Interest payments to investors in the project
- Anticipated monetary inflation
- Potential carbon credit
Project funding and installation
4. Power purchase contact agreed
Our customer agrees to the proposed electricity price and signs a Power Purchase Agreement.
5. Project funding
Upfront costs for the project are provided by BHESCo’s network of social impact investors (preferably from the area where the system will be based).
6. Energy saving / renewable energy technology installed
BHESCo project manages the installation of the solar panels and handles all associated solar installation considerations such as insurance, planning permission, grid connections, monitoring equipment, and the export of surplus electricity generation. In this was we can ensure that the value created by our systems is optimised for the benefit of our customers
Maintenance and monitoring during the Power Purchase Agreement period
7. Customer pays monthly bill to BHESCo
BHESCo bills the customer for the solar electricity they have used each month. The monthly cost paid to BHESCo is typically lower than what would be paid to an energy supplier*.
* This will depend on the measures that the customer chooses for BHESCo to finance. We encourage customers to look holistically at their energy use, taking action to drive down consumption through energy efficiency improvements.
8. Monitoring and maintenance
The BHESCo team regularly monitor the generation of the solar array to ensure that the technology is performing as expected and that the savings anticipated are being achieved. BHESCo addresses any issues as they arise. BHESCo arrange for solar panel cleaning and annual maintenance as is required by good practice.
The conclusion of the Power Purchase Agreement
9. Transfer of ownership
Once the upfront project costs have been repaid and associated interest payments made to the project investors, ownership of the solar panel array is transferred to the customer, who can enjoy free solar power for the remaining operational lifetime of the system.
Read more about all BHESCo’s financing options for commercial renewable energy projects: https://bhesco.co.uk/commercial/pay-as-you-save-finance
How our Power Purchase Agreement delivers long-term value
In most cases, the price per unit of electricity BHESCo offers the customer is significantly lower than what they currently pay to their energy supplier.
Further value is added to the contract due to the price certainty that is embedded into the Power Purchase Agreement. A typical agreement covers the expected life of the equipment, which in the case of a solar array is the warranty period of 25 years. As part of the PPA, BHESCo agree to fix price increases only at 3% each year for the duration of the contact. This is to account for the impact of inflation on operating costs.
By entering into a long-term Power Purchase Agreement with BHESCo, our customers are able to access affordable, reliable, hassle free, low-carbon energy for a substantial period of time. In addition to delivering meaningful cost savings to our customers, our Power Purchase Agreement provides price certainty and security from volatile energy markets, giving business leaders assurance over their energy costs for a quarter of a century, along with our expertise in renewable energy systems management.
We try to meet as much of the customer’s electricity demand through solar power generation as is possible, but this can almost never be 100%. Where demand cannot be met with solar power, the customer continues to buy electricity from their energy supplier, just as they do now.