Overview of the project:
There is tremendous potential for adopting solar energy to power the requirements of various customer segments. Power Purchase Agreements (PPAs) enable commercial and industrial customers to generate solar power at a lower tariff and save on operational costs without any capital investment. In a PPA solar project, the client pays for the energy generated by the solar power plant.
Solar power is at a much lower cost (up to 30%) than the grid tariff. As a result, the client benefits due to reduced operational costs at zero capital investment and no maintenance cost.
System Size and capacity:
In 2019, Freyr Energy installed the first solar PPA projects in Uttar Pradesh and Haryana.
- A 450kW solar installation at Raj Kumar Goel Educational Foundation (RKGEF) in Haryana and
- Solarization of two manufacturing facilities with 100kW solar system each at Bawal and Faridabad, by CMI Ltd., a leading manufacturer of speciality cables.
About our client(s):
RKGEF was established in 1999 and is a Trust started by the Late Mr Raj Kumar Goel. The Trust established Raj Kumar Goel Institute of Technology in Ghaziabad, UP in September 2000. RKGIT is recognised by All India Council for Technical Education, Ministry of Human Resources and Development and is affiliated to Uttar Pradesh Technical University, Lucknow.
CMI Ltd is a global brand and a household name in cables, wires and conductors. The Company has two manufacturing facilities one at Faridabad, Haryana and another plant at Baddi, Himachal Pradesh. The manufacturing facilities are spread over an area of 1,00,000 sq meters.
Impact:
The 450kW plant at RKGEF is expected to generate around 6.5 lakh units of electricity in a year at a 30% reduced tariff. The amount of CO2 emission saved through the project will be 622 tons per year which is equivalent to planting 7100 trees annually.
The 100kW plants installed at Bawal and Faridabad for CMI Ltd are expected to generate around 1.5 lakh units of electricity each while saving around 138 tons of CO2 emissions annually.
Frequently Asked Questions
A Power Purchase Agreement or a PPA is an arrangement that allows commercial and industrial institutes to make the most of solar energy without actually leasing or purchasing solar panels (thereby saving a ton of money as an initial cost). The companies would only be paying the amount of energy they consume, which in this case would be around 30% cheaper than grid power alternatives.
The biggest benefit of going the PPA solar way is it reduces the initial solar panel or leasing cost in properties and instead the beneficiaries would only pay for the amount of power they are using.
In a PPA model, a client pays for the power consumed and does not spend money on installation or leasing purposes. The units generated with these panels are far more economical and save a ton of money alongside reducing large amounts of carbon footprints.
The Power Purchase Agreement solar contract lasts for about 10-20 years depending on the company’s interests to continue with solar power.
Under PPA solar, it is the responsibility of the installing company to look after the solar maintenance and installation of the panels on the client’s site.
Yes. PPA power purchase agreement is suited for all businesses. It can be viewed as an alternative source of power which assures a long-term investment return and a massive reduction in annual power bills.
Companies can approach installers and communicate about the possible utilisation of solar energy with the PPA model. Based on the power consumption and monthly unit generated by the client company, a solar panel with a PPA model is designed and installed in the roof space.
The biggest problem with PPA is in the case of agreement clauses. Companies, if they plan to shift or shut down before the term of the contract is up, are likely to pay a termination fine for the same.