Take your Business Green without Stressing your Credit Line

Renting is another option for committing your company to renewable energy. This model is similar to the leasing approach, with one important difference. At the end of an operating lease agreement, the customer doesn’t end up automatically owning the renewable energy installation. These agreements allow use of the asset for the length of the contract.

Because of this, rented assets might not show up on a business’ balance sheet under some circumstances. One additional benefit of the operating lease agreement model is that its associated costs can be fully recognised on your company’s income statement as operating expenses.

Renewable energy often requires finance from a third party like banks or financial institutions, but they’re unlikely to make unsecured loans. In the absence of public subsidies in some countries, a Power Purchase Agreement (PPA) provides that security.

This model is a contract between a company and an energy producer to buy energy deriving from a specific project at a pre-agreed price, for a fixed period of time. It stipulates the duration, point of supply, delivery times, volume, price and product. Electricity purchased through a PPA can come from power plants located either outside of the customer’s property (off-site PPA) or on-site (from a newly built project).

While the on-site (direct-wire) PPA transmits electricity straight to the consumer and is located usually at the same location as the company site, the off-site (sleeved) PPA transmits electricity to the grid first, before distributing it to the customer. Even though an off-site PPA has a higher location flexibility, the energy plant and the off taker need to share the same grid network as the energy is physically exchanged. 

For many customers, a direct investment in the form of a renewable energy installation (like a rooftop solar system or a PV carport) makes sense. In this case, you have the option of a project where experts handle everything, starting from engineering to procurement and onward to the final construction works. Stress and risk are removed from your shoulders entirely.

Another long-term benefit for your business is the reliable generation of green electricity. Of course, such an installation requires an initial investment. But these are often offered with longer than average repayment periods to make them as viable as possible for your business.