PPA vs Self-Investment: Financing Models for Mall Solar Projects
One of the key decisions before starting a mall solar project is choosing a financing model — fully self-investing, or entering a power purchase agreement (PPA) with a provider. This article compares both to help management decide.
Self-Investment: Full System Ownership
Self-investment means the company covers the full installation cost upfront and owns the system outright. The advantage is capturing 100% of electricity savings from day one, and once the system pays back, the remaining years of its life produce power at almost no added cost. The trade-off is a large upfront capital outlay, and the company bears maintenance responsibility for the system's life unless a separate service agreement is arranged.
PPA: No Large Upfront Investment
Under a PPA, the provider invests in and owns the system, and the mall buys the electricity generated at an agreed rate — typically lower than the standard utility rate. The advantage is avoiding a large upfront capital outlay, with the provider responsible for maintenance for the contract's duration. The trade-off is that long-term savings per unit are usually lower than self-investment once payback would have occurred, and the long-term contract terms need careful review.
Factors That Should Drive the Choice
The right model depends on the company's financial position. With sufficient liquidity and a goal of maximizing long-term savings, self-investment usually delivers better returns. If the priority is adopting clean energy without affecting cash flow or existing capital budgets, a PPA fits better. Some companies use both models across different buildings, as appropriate.
What to Check in a PPA Contract
If choosing a PPA, review the contract term, the electricity rate and any future price-adjustment terms, liability if the system underperforms or has issues, and buyout rights when the contract ends. These details materially affect the long-term value of the agreement.
Consult an Expert Before Deciding
Both models have trade-offs that depend on each company's situation. Consulting an EPC provider who understands both the technical and financial structure helps management see a clear comparison of both paths before deciding.
Let us help compare the right financing model for you
SGC Power's team advises on both the technical and investment structure, to find the model that best fits your business.
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