PAYG Solar, also know as a power purchase agreement (PPA), is a finance model that allows commercial, industrial and government energy users to install solar power with zero up-front-cost. In return, the customer agrees to buy the solar power that is generated at a fixed price for a set term.

The price paid by the customer is fixed per kWh, at a rate at or below the current tariff. At the end of the term, the system belongs to the customer. To be suitable for power purchase agreements, businesses must:

• use most of their electricity in daylight hours
• own their buildings
• have a large roof area without significant shade
• be interested in fixed price electricity at a discount from market tariffs for a fixed term

If this sounds like your business, ask your solar power provider about a PAYG Solar model or contact Demand Manager.

Value

Demand Manager offers this kind of funding to Solar System Installers. The value it provides to solar customers is:

• They are guided through the process
• Provided with answers and help
• The offer is flexible, and can offer varying lengths of payback

This model is not dependent on government schemes or the Renewable Energy Target, however STCs are typically taken into account in the setting of the Solar Tariff.

Economics explained:

• Most businesses buy electricity from the grid for about 20 to 30 cents per unit.
• If the solar power system exports a unit of electricity, the utility will buy it back for around 6 cents.
• If the business uses that solar electricity on site instead, it avoids having to pay 20 to 30 cents for that same unit.
• Under a PAYG Solar model, the customer agrees to buy the electricity generated by the solar power system for a set rate over a set period of time.

This approach means no upfront cost to install. The system is then owned by the business at the end of the agreement.

The solar tariff is structured so it is cheaper than the traditional grid tariff and the business makes savings as soon as it is operating. The company will get an electricity bill from Demand Manager for the term of the agreement, that will be a saving on their previous bills without solar power.

The Safari Firearms shop is one of the biggest firearm retailers in NSW. The shop normally opens between 7am and 6pm. They run the usual lights, IT servers, cash registers, air conditioning in the summer months – but this was costing them over $1,000 a month. By installing a solar system under a PAYG Solar model, it helped dropped the bill by around 20%.

The 15kW commercial solar system was also eligible for a rebate worth around $11,000 thanks to the Australian Government’s Renewable Energy Target. The PAYG Solar model meant the customer had no upfront cost. The business makes a saving from day one and at the end of the agreement, they get to own the system outright. For the term of the agreement, Safari Firearms gets two bills – one from the old supplier and one from Demand Manager. Combined, they are less than what the company used to pay.