02 Oct So you wanna Pee Pee, Aye? (Part 1)
I don’t offer PPA style financing. I believe that for the commercial SME market, straight up finance is a better fit.
But this isn’t about my opinion. It’s about financially how you would go about offering PPAs if you chose to do so.
In part 1, we’re going to get on the same page about the deal that is being offered. In part 2 we’ll go over how to get the money to actually do it.
Your customer, gets solar installed on their roof, that you the installer own. Your customer then enters a contract with you the installer, to buy the energy generated from your solar at a RED HOT (debateable) price.
You the installer, don’t get money upfront like a normal sale. Instead you get money every month (or billing cycle) over the contract.
Your customer only has to sign a new electricity contract. It will last a minimum amount of time so you have a guarantee you’ll get your money back.
And there’s usually a clause in there that’s lets ownership of the solar transfer to the customer at the end.
Some installers prefer this to a cash or finance sale because you don’t have to sell anything to the customer. The customer isn’t buying a product from you.
All they are doing is buying electricity (like they always have) but at a cheaper rate. Which makes the “sale”, easier.
But that’s not even the best part. The best part is that as long as it’s set up correctly, YOU the installer, get a lot more money in the long run.
Please note that I am not referring to getting a PPA where a separate entity is the owner of the goods.
There’s heaps of guys in the market like this now. Where you get an upfront payment like a cash sale and maybe a commission for signing up the deal as a PPA.
The scenario I am referring to is where YOU the installer own the goods.
So how do you go about offering this? Stay tuned for part 2.