For Singaporean enterprises looking to decarbonise operations without depleting CAPEX, a solar power purchase agreement (PPA) offers a sophisticated alternative to traditional energy procurement. A PPA is a long-term commercial contract where a solar provider finances, installs, and maintains a solar PV system on your property. In exchange, the business agrees to purchase the generated electricity at a fixed rate that’s consistently lower than the prevailing grid tariff. Think of it as a smart play for those who want the golden egg without having to buy the whole goose.
Deciding what financing structure best serves your company’s bottom line is a critical first step. A major part of this process is understanding the difference between simply hiring an Engineering, Procurement, and Construction (EPC) firm to install a system you own, and entering a PPA where you forgo the upfront cost in exchange for a lower energy rate. The choice typically hinges on whether your organisation prefers to act as the asset owner or simply as the beneficiary of the energy generated.
| Feature | Solar PPA | Upfront | Solar Loan |
| Upfront Cost | Zero. The provider absorbs all initial capital outlay. | High. Full capital expenditure is required at the onset. | Moderate. Requires a down payment and debt service. |
| Ownership | The provider owns and operates the system. | Your business owns the asset from Day 1. | Your business owns the asset (encumbered by the loan). |
| Maintenance | Included. Comprehensive O&M is the provider’s duty. | Internal responsibility for all repairs and cleaning. | Internal responsibility for system uptime. |
| Primary Benefit | Immediate OPEX reduction with zero technical risk. | Maximum long-term ROI and total energy control. | Asset ownership facilitated by external financing. |
For facilities utilising commercial solar power panels, the primary advantage of a PPA is the decoupling from volatile energy markets. By locking in a pre-determined rate, your business gains significant budget certainty.
Consider a scenario where the current industrial grid tariff is $0.32/kWh, but your PPA secures a rate of $0.22/kWh. If your commercial facility consumes 20,000 kWh per month from the solar array, your monthly expenditure drops from $4,400 to $6,400. This represents a $2,000 monthly reduction in overhead—savings that are realised without a single cent of initial investment. Over a 20-year term, this creates a substantial hedge against rising utility costs.
While the “zero-down” model is highly attractive for commercial cash flow, a power purchase agreement is a multi-decade contractual commitment. It’s not a virtual agreement; it involves a physical infrastructure integration that requires careful due diligence:
Relying solely on the grid means your business remains subject to price fluctuations with no path toward energy autonomy. A PPA fundamentally changes this dynamic, transforming an underutilised roof into a high-performing financial asset.
At FOMO Energy, we specialise in high-yield commercial solar solutions that integrate seamlessly with your operational goals. Our rent-to-own solar models are engineered to remove the barriers to entry, providing a clear path to energy independence. By putting your roof on the payroll, you ensure that your overhead heads in the only direction that benefits your bottom line: down.
