What a solar buyback is
A solar asset buyback is the sale of an existing, operating solar installation by its owner to a buyer. Unlike selling a property, the panels usually stay exactly where they are. What changes is who owns them — and, in the model we are exploring, how the business that hosts them pays for the electricity they generate.
The arrangement typically has two linked parts: an agreement to transfer ownership of the solar equipment, and an agreement covering the ongoing supply of electricity from that equipment to the site.
Why an owner might consider it
- To release capital invested in the system for use elsewhere in the business.
- To hand over ownership responsibilities for the equipment, subject to the agreed terms.
- Because the business is reviewing its assets, financing or capital priorities.
- To obtain a clearer view of the system's condition and value through an assessment.
How an onsite PPA may work
A power purchase agreement (PPA) is a contract to buy electricity. In an onsite PPA, electricity generated by the solar system on your premises is supplied to your business, and you pay the system owner for the electricity you use under the agreed pricing.
It is important to understand what an onsite PPA covers. It relates only to electricity generated by the solar system. Your business would usually still buy the rest of its electricity from the grid through its retailer, and grid-related charges — network charges, fixed charges and demand charges — continue under your retail arrangements. Any electricity exported to the grid, and who receives payment for it, also needs to be addressed in the agreement.
Selling electricity to another business is regulated. Arrangements of this kind are commonly structured under the Australian Energy Regulator's retail exemption framework, and whether a particular exemption applies depends on the circumstances. That is one of the reasons each arrangement needs proper assessment and advice.
Comparing costs fairly
A meaningful comparison looks at the whole electricity bill before and after, not just the per-kilowatt-hour rate for the solar portion. We do not promise savings. Any proposal would set out its terms clearly so you can evaluate them with your own advisers.
What information is needed
To make an initial enquiry you only need the basics. As an assessment progresses, the following may be useful:
- The installation address and approximate system size (kW or MW).
- Who owns the system, and whether the premises are owned or leased.
- Any finance, lease or other agreement attached to the system.
- The original installation contract or invoice and system specifications.
- Inverter or monitoring data showing historical generation.
- Recent electricity bills, so that onsite use can be understood.
- Warranty documents for panels and inverters.
Potential advantages
- Capital that was fixed in equipment may become available to the business.
- The site may continue to use solar electricity from the same system.
- Ownership responsibilities may shift to the buyer, as set out in the agreements.
- An assessment provides an informed view of the asset's condition and performance.
Risks and obligations
A buyback will not suit every business or every system. Consider, among other things:
- The ongoing PPA is a long-term commitment. Its term, pricing, price escalation and exit provisions matter.
- Relocation, sale of the premises or a change of tenancy may have consequences under the agreements.
- Existing finance, leases, landlord requirements and warranties may restrict or complicate a transfer.
- Renewable energy certificates (such as STCs or LGCs) associated with the system may have been created or assigned already, and rights to future certificates need to be addressed.
- Tax and accounting treatment, including GST, should be confirmed with your adviser.
- Site access for maintenance, roof works and insurance responsibilities need to be agreed.
Why the contract terms matter
Two businesses can sell similar systems and end up with very different outcomes because of the terms they agree. Ownership transfer, the condition of the asset and the electricity pricing arrangements all require proper evaluation. We encourage every owner to obtain independent legal, tax and financial advice before entering into any agreement.
Have more questions? Read the frequently asked questions or request an assessment.