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Solar Power Investment Models EPC and PPA: The Difference Between the Two Models.

EPC and PPA contracts The difference between two solar power contracts

Regarding the solar power investment model, EPC and PPA have long been known as solutions for implementing large-scale solar power projects , for investors and business owners who want the value of renewable energy. create a sustainable and highly economical way.

However, this is also a difficult problem for anyone who wants to learn about these two solar power investment models!

So what is the difference between the two solar power investment models EPC and PPA? Which model should I choose?

In this article, VREnergy will answer all your questions about the two models and analyze in detail the economic efficiency of each model for investors and business owners.

Comparison: EPC and PPA solar power investment models

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We must agree that any investment model has one sole purpose: Bringing profits to investors and business owners.

For investment projects in renewable energy, we will encounter EPC and PPA solar power investment models.

So what is the difference between the two models? Let VREnergy explain it to you…

What is the EPC solar power investment model?

The EPC solar power investment model is a package solar power investment model, in which the investor only needs to sign a contract with the EPC general contractor to provide all services from design, material procurement, Construction, installation, operation and maintenance of solar power systems.

How the solar power EPC general contractor model works is as follows:

Investors contact the EPC general contractor

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Investors contact the EPC general contractor to provide information about solar power investment needs, including:

  • System installation location
  • Intended use of the system
  • Total system capacity

The EPC general contractor conducts surveys, designs, and prepares cost estimates

After receiving information from the investor, the EPC general contractor will conduct an actual survey of the installation location, design the solar power system and prepare a cost estimate.

The two parties signed the EPC contract

After agreeing on the design and cost estimate, the two parties will sign an EPC contract. The EPC contract will include the following main contents:

  • Work items that the EPC general contractor will perform
  • Project implementation time
  • Contract value
  • Rights and obligations of the parties

The EPC general contractor conducts material procurement, construction and installation of the solar power system

The EPC general contractor will purchase the necessary materials and equipment to build the solar power system according to the approved design. After that, the EPC general contractor will proceed with the construction and installation of the solar power system according to technical procedures.

The solar power system is operated and maintained by the EPC general contractor

After the solar power system is built and accepted, the EPC general contractor will operate and maintain the system according to regulations.

Investors do not need to invest initial capital, just need to pay the EPC general contractor according to the construction progress or after completing the project. Investors also do not have to worry about technical issues, legal procedures, system operation and maintenance. Project implementation time is quick, only 3-6 months.

PPA solar power investment model

Different in form, the PPA solar power investment model is an electricity trading model between solar power investors and electricity customers. In particular, the investor is responsible for investing, building and operating the solar power system, while electricity customers will buy back all or part of the electricity produced from the solar power system according to the contract. Power purchase agreement has been signed.

The difference between two solar power investment models

EPC and PPA solar power investment models are two popular solar power investment models today. Each model has its own advantages and disadvantages, suitable for the application purposes of investors and business owners.

And below is a table comparing the differences between the two solar power investment models EPC and PPA:

NaturePPA modelEPC model
InvestmentNo need to invest capitalNeed to invest capital
Own the systemThere is no ownership of the systemTake ownership of the system
Electricity priceBenefit from electricity selling prices under PPA contracts, which are often lower than EVN’s retail prices.Benefit from electricity selling prices under PPA contracts, which are often lower than EVN’s retail prices.
Deployment timeImplementation time is quick, only 3 – 6 months.Implementation time is longer, from 6 – 12 months.
Suitable for the subjectSuitable for investors and business owners who do not need to own a solar power system.Suitable for businesses and individuals who want to own a solar power system

So which solar power investment model is the optimal choice for investors and business owners?

Choose the appropriate solar power investment model

Choosing the EPC or PPA solar power investment model depends on the needs and capabilities of each investor and business owner:

  • For investors and business owners who do not need to own a solar power system and want to save time and effort in investing in solar power, the EPC model is the right choice.
  • For investors, business owners, and individuals who want to own a solar power system and want to benefit from electricity prices under PPA contracts, the PPA model is the right choice.

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In short, choosing the appropriate solar power investment model depends on the needs and capabilities of each business and individual.

If you do not need to own a solar power system and want to save time and effort in investing in solar power, the EPC model is the right choice.

If you want to own a solar power system and want to benefit from electricity prices under a PPA contract, the PPA model is the right choice.

To make the right decision, you need to carefully consider factors such as needs, financial capacity, project implementation time…