This blog-page gives you more details about the solar lease solutions than on the main part of the Solareo website. If you want a simplified presentation, please read more here.
Solar lease or solar leasing is a service provided by a solar power producer to industrial, commercial building owners or community house owners or land owners to use solar electricity at no upfront cost.
Why a solar lease?
Photovoltaic solar panels can be installed on the roof of a building or on the ground. Such equipment is a long-term investment, with 30 years lifetime (solar panels are guaranteed for 80% of their performance for 25 years).
To enhance the usefulness of an otherwise unutilized roof or an abandoned land with solar electricity, the customer has to:
- Invest capital to build its photovoltaic plant (panels) and
- Use of solar electricity produced by the panels to reduce electricity consumption from the public grid – thereby to save money on electricity cot.
But more often this ambition faces several obstacles:
- The initial investment is high,
- The return is close to a real estate investment: stable regular income over the long term, but with limited profitability, Operation and maintenance of a solar power plant requires a permanent technical and administrative management
- and it is often very difficult to find the right specialist
However, this solution needs regulatory support. That is why solar lease has become popular in many countries including Singapore and the US, thanks to the legal stability in these countries. The regulation supports that the solar power producer is entrusted to build a solar power plant on the roof or the land on condition that it will manage the entire operation of the plant and only sell solar electricity generated by the plant to the customer.
The solar power producer assumes the following responsibilities:
- Development: the development of the project end-to-end from technical design of the plant, obtaining administrative authorizations or licenses.
- Investment: the solar power producer brings the entire investment through its own equity funds and debt from its banking partners.
- Construction: the entire site (roof or land) is managed by the solar power producer (operator) from supply of equipment to the installation of panels and electrical connection to the building
- Operation: all maintenance and administrative management are provided by the solar power producer (operator). In case of production problems, it is the operator who is affected, not the customer.
- Sale of electricity: the solar power producer then sells the solar electricity to the occupant of the building or to houses or to the customer in general that enjoys less expensive electricity from sun than electricity from the grid year after year.
What are the advantages of a solar lease?
Solar lease can reduce electricity bill immediately since the customer benefits from purchasing less expensive solar electricity during the daytime and reduce purchase of expensive electricity from the public grid during rest of the day.
In summary, for the customer, the benefits are:
- Zero (0) investment capital required
benefit from cheaper solar electricity than electricity from public network (grid)
- No operation and management responsibility / obligation
- In case of problem plant output (sometimes due to bad weather) the solar power producer (operator) is affected, not the customer
Solar lease provides some indirect benefits:
- Provides negotiation power to the solar power producer while purchasing solar equipment
- Helps the solar power producer negotiate financial cost its funding partners
- Experience of a specialist in the production of solar electricity.
In short, the solar lease provides a “headache free” solution for the customer while enhancing the functions its roof surface or an abandoned land.
In any case, you retain your connection to the public network (grid), which provides all electrical supplement required by the site (in case of bad weather, at night or in case of failure of the solar panel).
Legal, technical and financial aspects: how to build a solar lease
A solar power producer proposes to offer a solar lease to you. If you have a roof, car park or large land and if your electricity bill is high, you contact such a service provider. The solar power producer company comes and inspects your site and provides you an estimate of solar power potential (SPA) to give you a realistic idea of total solar electricity generation per year. Because it is a long-term investment, both parties share equal and reciprocal commitments.
Here are your commitments:
- Sign a contract to purchase electricity over 20 years
- Sign a contract with the solar power producer that secures its presence on the roof for at least 20 years (roof license, lease, or other legal document)
- Allow the service provider access to the roof for operation and maintenance or for troubleshooting
Generally a solar leasing consists of the following steps:
- Step 1: An engineer of the solar power producing company visits your site (roof or land) to perform a preliminary assessment (available real surface, stress / additional weight acceptance on the roof, connection constraints, power consumption of the site etc.)
- Step 2: The solar power producer proposes the price at which solar electricity will be sold to you. This stage takes about 2 months.
- Step 3: You sign a PPA with the solar power producer and a roof license or long term lease (20+ years) or equivalent. This takes about 1 month.
- Step 4: completion of construction. This takes about 8 months from the beginning of the proposal.
- Step 5: Commissioning of the plant and beginning of electricity production. By the 11th month it starts and completes within a month.
Note: Sometimes excess solar electricity can be sold back to the public network (grid) with the use of a two way meter. The customer can decide to sell on its own or can allow the solar power producer to sell.