Why use Broadreach to finance a system?
With electricity prices, power supply disruptions and climate change pressures all increasing, the case for affordable green power is made. But what benefit is there in using Broadreach to help you with your energy solution when you could pay for the system yourself?
Once you factor in the legal costs of contracting engineers, supervising construction, and then operating, maintaining, repairing and insuring a system yourself, it is unlikely to be a less expensive alternative. Additionally, Broadreach carries the risk if anything goes wrong during the construction and operation of a system, so you will only ever make savings without having to spend a cent. In short, Broadreach offers you a peace-of-mind solution to your energy needs.
What are the options?
Power Purchase Agreements (PPAs)
In terms of a PPA, Broadreach will build a system for you, and then operate, maintain, repair and insure it over the life of the PPA, at no up-front cost to you.
Instead, you pay for the electricity produced at a rate per kilowatt hour (kWh, or “unit”) in the same way you would pay your utility – except of course, that the rate is cheaper and our annual escalations are lower. Structured and implemented correctly, a PPA can be “off balance sheet” – i.e. it will not be seen as a finance lease or other form of debt on your balance sheet. The terms range from as short as 5 years, up to 20 years, and in longer contracts the option exists for you take ownership of the system at the end of the contract.
Under a PPA, you take no risk – if the system doesn’t produce electricity, you have nothing to pay for, so the risk of making sure the system works is ours.
Solar Leases / Equipment Leases
As with a PPA, under a “Solar Lease” Broadreach will build, operate, maintain and insure a system for you. At the same time we sell the system to you on a “lease-to-own” basis in return for fixed monthly payments. You get the use of the system and the electricity it produces for the duration of the contract, and ownership of the system at the end.
Under a “Solar Lease”, Broadreach guarantees the energy production from the system and reimburses you for any under-production, so again you only pay for what you receive and the risk of the system performing lies with us. The contract terms typically range from 5 to 20 years.
An equivalent of the “Solar Lease” can also be used to finance energy efficiency projects, in very much the same manner as for a solar PV system.
A “Solar Lease” or equipment lease will be “on balance sheet”, meaning it will be seen as debt on your balance sheet (unlike a PPA). However, the costs under this agreement are usually lower than a PPA as there is a special depreciation allowance (section 12B of the Income Tax Act) that you can claim.
If you are a project developer or small scale utility project owner (5-20MWp) Broadreach is able to provide development finance, and to contribute financial, legal and technical skills to bring the project to financial close. Broadreach prefers not to invest in pure greenfields developments, and typically we require that land rights, grid connections and offtake should all be reasonably secure. The further developed the project is, the higher the value it will achieve.
Broadreach is an equity investor and is interested in acquiring both minority and majority stakes in suitable developments. We also invest actively in operating projects, where our asset management skills add value. In addition, Broadreach has key experience in raising project finance debt, and in structuring non-standard projects to make them bankable.
Read more about our utility scale projects here.