A solar service agreement is an agreement with an independent company who agrees to provide cheaper power than that offered by a local centralized utility. They can be structured as a lease, power purchase agreement (PPA), or a levelized PPA. Solar service agreements are a favorable option for large commercial & industrial businesses, government / public institutions and school districts / universities.
The equation for a solar service agreement is as follows: SSA = Equipment Loan + ITC/Depreciation + O&M Service Agreement
1. Solar Service Agreements Reduce Expenses & Increase Profits
When companies choose to go with a SSA they benefit their bottom line. By using this business model, companies avoid having high upfront costs as the arrangement removes system performance risk, complex design and permitting processes, which can make the arrangements cash flow positive from the beginning of the agreement.
2. On-site Generation of Clean, Renewable Power
Solar PPAs benefit the corporate sustainability of a company by providing clean, renewable power on-site.
3. Decreased Carbon Emissions from Operations
By using renewable power, companies reduce their carbon emissions as they transition away from fossil fuels running their operations.
4. Energy Independence & Electric Grid Relief
Having a private energy agreement reduces the need to rely on the grid, which strengthens the stability of a company’s energy usage and helps avoid centralized issues with the grid.
5. Favorable Financial Terms For the Project
Solar service agreements are popular with financiers as they can benefit from the solar investment tax credit. This means that host companies typically get good terms for the project.
6. No Upfront Costs or Maintenance Costs
By using a SSA, companies can be cash flow positive from the beginning. Although the host company agrees to have solar installed on their premises, the maintenance and repair costs lie with the solar services provider, which provides peace of mind for the host company.
At EnergyLink, we are committed to making the SSA process as easy as possible. With experts on our team, we specialize in taking our clients through the entire process from designing, to funding, to building. Reach out to us today to get your project started!
