The average solar system has a lifespan of 25 years, where the business that purchased it has signed a Power Purchase Agreement (PPA) to receive cheaper energy from the system during that time. Essentially, the company that offers the panels provides them, and the company that has them installed gets cheaper energy, but does not own the panels. But what happens if that business wants to sell before using 25 years worth of energy? This is a major deterrent for building owners to install a solar system on their building, because they are concerned about the money they may lose when they sell before the 25 years is up. That energy savings that they would have gotten through the PPA will go to the new owner, and that can cause the first owner to lose out.
But there is more to the equation than just whether the cheaper energy will be forfeited by the seller. It is important to realize that having the solar system can increase the sale price of the building itself, because the new owner will have the opportunity to have free or significantly cheaper energy for the remainder of the system’s lifespan. That could be two years or it could be 20, but advertising it as a perk of buying the building could help a seller get more for the sale. That would offset the lack of cheaper energy that the seller would be getting by moving to another location.
Are Solar Panels Really Worth the Cost?
When solar systems for commercial applications first came out, there was no denying that they were very expensive. Rather than having a lot of businesses install them to save energy and increase their efficiency, what mostly happened was very well-off companies that were committed to the environment and wanted to make a statement installed them here and there. They were not used much, and even bigger companies that could potentially afford them often did not choose to have a system big enough to power their entire building, because of the cost. But times have changed, and solar now costs much less.
Currently, solar systems cost 75% less than they did back in 2006, and the cost has come down fully 100 times since 1977. With that being the case, solar panels are more affordable for businesses than ever before. That does not mean they are inexpensive, but that they are far more of a consideration than they would have been even 10 or 15 years ago. More business owners today can afford them, and when they install them they quickly find that the savings on their energy bill is significant and can help them see higher levels of financial success due to reduced outflow of cash every month.
Another way to get a solar system for a business without breaking the bank is through private or public funding, and there are many grants and other options that businesses can explore when it comes to collecting the funds to purchase a solar system. With a PPA, though, the panels still belong to the solar power company. They own them, and are providing a reduced rate for cheaper energy for the company that has these panels installed. That can be among the other ways that a business can get solar energy, because it does not need to put so much money out right at the beginning, when it wants to start up a solar system.
How Does a Buyer Benefit?
Just like buying a house with solar panels, buying a commercial building with a solar system can help a company save big in the long run. They are not going to have to pay nearly as much for power as they would in a different location, and that can mean big savings every month. For buyers who are concerned about the environment or who appreciate alternative energy sources, there are other benefits, such as feeling good about how they are treating the planet or knowing that they are using sustainable resources instead of something that may run out in time. For some companies, this is becoming extremely important.
Businesses who are concerned about getting involved in a PPA because they might sell the building before 25 years have passed should reconsider. Even if they sell the building they do not have a big investment in the solar panels. The PPA ensures that they do not own the panels, so they do not have to pay a lot up front. Additionally, while the cheaper energy is important, if they sell the building they likely would have done so whether they had reduced energy bills or not. The investment in a PPA is not the same as an investment in a complete solar system, purchased by the company.
The reliability and low levels of maintenance offered by having solar panels can also be very attractive to buyers. Power out? No problem. The solar panels will keep the business running. Need maintenance? The panels are not owned by the company, but by the power provider. There are so many great reasons to have solar panels and enjoy all that solar energy can offer, that companies should not be worried about selling their interest in the PPA when they may want to sell their building. As more buyers see the value of solar energy, purchasing a building with a PPA already in place will become even more attractive than it already is.