by Ir. Azean Abu Samad.
Solar Energy Purchase (SEP), also known as Solar Power Purchase Agreement (PPA), is a financing agreement that enables organizations to purchase solar electricity with ZERO upfront cost.
A third-party owns, develops, and finances the project’s installation, recovering their costs via the sale of solar electricity generated at contracted rates. Both parties will enter into an agreement named Supply Agreement with Renewable Energy, or short for SARE, that typically runs between 15 to 25 years. You can check out more information on SARE on our TNBX blog.
Under this arrangement, customers as the owner of the building, provide the space (rooftop/parking lot/unused space in the building compound) for the solar system installation.
The customers only pay for the solar energy generated at a rate that is typically lower that the electricity tariff offered by the utility. In short, customers only buy the solar electricity and not the whole set of solar equipment.
The third-party solar provider, also known as Asset owner, or Registered Solar PV Investor (RPVI) in Malaysia, takes responsibility for ownership, operation, repair and maintenance of the solar system throughout contract period.