What is a Power Rental Agreement (PRA)?

August 21, 2023by admin

If you’ve done business with us or received a quote, you may have heard us mention a PRA and wondered what it is.

A solar Power Rental Agreement (PRA) is a financial arrangement that allows businesses to acquire solar energy systems without any upfront costs. The solar provider installs, owns, and maintains panels on the premises. The customer then agrees to purchase the generated electricity at a predetermined rate over time.

Solar PRAs are popular as they offer businesses immediate savings on their electricity bills while supporting a sustainable future.

Here’s how a typical solar PRA works:

Installation

The solar energy provider assesses the business’s energy needs and designs a solar energy system tailored to those requirements. The provider handles the installation and ongoing maintenance of the system.

Electricity Purchase

The business agrees to purchase the electricity generated by the solar panels from the provider at a predetermined rate. This rate is often lower than the utility’s retail electricity rate, leading to immediate cost savings for the business.

Excess Power

When a solar energy system generates more electricity than is being consumed by the business, it can result in excess power. The provider will allow access power to be exported to the benefit of the business.

Contract Duration

The PRA usually has a contractual term of 8 years. During this period, the business benefits from reduced energy costs and the environmental advantages of solar energy.

No Upfront Costs

One of the key advantages of a solar PRA is that the business does not need to make any upfront capital investment. The solar energy provider bears the upfront costs of system design, installation, and maintenance for the duration of the contractual period.

System Ownership

The provider retains ownership of the system and is responsible for any repairs, maintenance, or operational issues that may arise over the contractual term or renewal thereof.

Fixed Tariff Escalations

Unlike traditional utility electricity tariffs that can fluctuate and increase over time, a solar PRA enables businesses to purchase electricity from the provider at a predetermined rate, this rate is often fixed or includes fixed escalations over the contract term.