Power Purchase Agreements & Capex free Financing CHP Projects
Let Helec show you how to get access to reduced energy costs through a no Capex energy contract agreement.
With the drive for commercial businesses to look to reduce energy costs going forward in order to produce cost effective goods at an affordable price and reduce their carbon footprint it’s not surprising the cash required to achieve this is not always readily available.
When this is the case their are a number of financial options open for consideration in Power Purchase Agreements and financial loans & lend lease arrangements.
So, what is a Power Purchase Agreement?
A PPA is a contract between an energy buyer and an energy seller.
The two sides form an agreement to buy and sell an amount of energy that will be generated by a renewable asset, such as Solar PV, or a Combined Heat & Power arrangement.
To be more specific, a corporate PPA, as one might assume, is a contract governed by corporate buyers of all, or at least part of the energy produced via an off-site co-generated renewable, or reduced carbon emitting energy provider (CHP). Essentially, the agreement is between a business and an energy generator.
It is worth noting that with corporate PPA, both parties of the agreement are commercial entities, with no involvement of state-owned utilities. This means contracts tend to be relatively flexible and creative.
Generally, corporate PPA contracts are long term, usually covering a period of 10-20 years.
What are Power Purchase Agreements used for?
PPAs are used to encourage renewable energy and promote a drive towards a corporate net zero operation.
PPAs help finance renewable projects and establish a buyers’ commitments, which in turn gives lenders confidence.
Essentially, they enable businesses to implement renewable tech and carbon-reducing, on-site co-generation, to their ongoing energy management strategy and transition to net zero.
All of which can be delivered by Helec, as ALL of our CHP units are “Hydrogen Ready” to engage with reducing carbon emissions through a greener fuel source.
What are the benefits of a PPA?
The main benefit of a PPA is the potential to significantly reduce a company’s energy spend.
The energy provider of the PPA will always try to sell energy cheaper than market value and, in the long term, PPA contracts will protect organisations from future energy price hikes and market fluctuations along with fragile grid connectivity.
Reducing a businesses’ energy spend is an effective way to maximize profits and free up the budget for further investments or growth.
Additionally, aside from finance, PPAs prove an organisation is committed to the UK Government goals for NET Zero.
Any application taken by a company to implement some form of decarbonisation, either directly, or via an offsetting approach will be a positive step for the business and the world !
Helec work with a number of reputable “Green Bonded” energy companies in order to deliver highly efficient CHP & Genset equipment that will provide these low cost on-site generated energy savings in electrical power and thermal energy.
We take historical kWh energy bills from the gas and electric suppliers, along with the tariffs charged and map out the power trends across the day, week, month and year for the site. That way we can evaluate which type and size of CHP will be best suited to the site in question and how much it will save by generating power on-site and not buying from the national grid.
The average saving per kWe generated by a site CHP unit can be between 6 – 8 p/kWh*, so imagine how much is saved if you use a 1,000,000 kWh of electricity
(* – subject to tariffs charged)
See this example report:
A business uses 3,626,035 kWh of grid supplied electricity per year has a fairly good net elec tariff @ £0.20 p/kWh.
Even with this low tariff they will save £333,140.69 per year (net after gas & service charges are deducted) if they generate their own power.
Need to know more about how we can help you achieve the savings you need?