Factory Solar: Own Investment vs Third-Party Model
Compare buying the system with paying a third party for electricity or equipment use
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Buying factory solar and using a third-party model create different ownership, payment and operating responsibilities that should be compared together. Ownership commits capital and leaves defined operating responsibilities with you; a third-party model may reduce the initial payment while creating longer-term energy or lease obligations. The better fit depends on how those commitments align with your finances and plans for the premises.
What changes when the business owns the asset?
With outright purchase, the business exchanges capital today for ownership and the electricity benefit available under the agreed arrangement. That can suit a company able to fund the asset and retain the duties assigned to its owner. The comparison with third-party supply therefore needs to include both the benefit of ownership and the costs that come with it.
Owning the system gives the business control of the asset, subject to the applicable approvals and agreements. It also uses capital that could fund machinery, stock or other needs. Financing spreads the payment but adds repayment obligations and borrowing costs.
For an owned system, list costs after installation, including servicing, connectivity, insurance and expected replacements where relevant. Check who arranges and pays for each item. The equipment purchase price does not show the full cost of ownership.
What changes under a third-party model?
A third party may take on the initial funding or ownership, but it needs to recover that investment through the contract. Energy payments or lease charges replace part of the customer’s upfront commitment, with different obligations depending on the model. The relevant question is not whether the system is free at the start, but what the business pays and retains over the term.
The customer should understand what it pays for, how the price changes and what happens when output or consumption differs from expectations. Maintenance or insurance may be included, but the agreement needs to say so.
Compare power purchase agreements and equipment leases separately. One may charge for electricity supplied while another uses a fixed periodic equipment payment. Ask how lower generation or reduced factory demand affects what you pay under each actual offer.
| Question | Own investment | Third-party model |
|---|---|---|
| Who owns the system | The business, subject to the applicable approvals and agreements. | A third party may take on the initial funding or ownership and recover it through the contract. |
| What the business pays | Capital today, or financing that spreads payment while adding repayment obligations and borrowing costs. | Energy payments or lease charges over the term, replacing part of the upfront commitment. |
| Costs after installation | Servicing, connectivity, insurance and expected replacements. Check who arranges and pays for each item. | Maintenance or insurance may be included, but the agreement needs to say so. |
| What to compare | The benefit of ownership against the costs that come with it. | What the business pays and retains over the term. Compare power purchase agreements and equipment leases separately. |
Compare total payments over the same period
The financial difference becomes clearer when both models use the same proposed system, generation forecast and factory demand. Comparing them over a common period then shows how the timing and total of customer payments differ. Without that consistency, an apparent financing advantage may simply come from different project assumptions. Compare the commercial solar financing options using total payments, ownership and the obligations in the actual agreement.
For ownership, show investment, financing if used, electricity benefit and recurring costs. For a third-party arrangement, show avoided grid cost, solar payments, retained costs and any agreed end-of-term payment. Once the net savings are clear, assess the commercial solar payback period against the investment and ownership costs.
Show annual and cumulative cash flow for each offer. State whether future amounts have been discounted to today’s value. The table should show when money leaves the business, not just a lifetime saving that combines amounts from different years.
Compare control and flexibility
An owner may have more direct control over the asset, but changes still need to respect equipment limits, approvals and warranty conditions. A third-party agreement may impose additional consent requirements.
Discuss future production expansion, site changes, tenancy renewal and relocation. Ask how the contract deals with lower electricity consumption, altered working hours or a business transfer.
Review these conditions against your expected time at the premises. Low upfront cost does not remove obligations to make future payments or maintain access. Check the consequences of leaving or changing operations before choosing an arrangement.
Clarify who carries performance risk
How each model handles lower generation can affect which one suits the business. A reduction might lead to lower electricity benefit, reduced energy payments or a contractual remedy, depending on the agreement. This needs to be understood separately from equipment warranties so management knows which consequences it carries under each offer.
Do not infer a commercial performance guarantee from a residential offer. Any commitment should be stated in the actual C&I agreement, with its measurement basis and relevant conditions.
For third-party arrangements, identify whether the customer pays only for delivered energy or has other purchase or lease obligations. For ownership, identify who investigates faults and which corrective costs fall outside warranty. The financial comparison should follow those allocations.
Separate tax assumptions from electricity value
A tax benefit should follow the party and expenditure eligible under the actual arrangement. It cannot simply be assigned to the customer in both an ownership model and a third-party model to improve the comparison. Separating tax treatment from electricity savings lets the company’s advisers check that the forecast includes benefits the business could actually obtain.
Ask the company’s adviser to review any allowance or incentive included in the decision paper. Do not count the same tax benefit for both the system owner and the electricity customer.
Present a comparison before tax incentives and another with supported assumptions where appropriate. This allows management to see the underlying operating value and the separate effect of a benefit that may depend on approval or the company’s tax position.
Assign day-to-day responsibilities
Third-party supply can change the workload without removing the customer’s role entirely. Someone still needs to review charges, coordinate access, receive reports and raise commercial questions. Understanding those duties helps management compare not only the price of each model but whether the facilities and finance teams can manage it throughout the agreement.
Name the responsible contacts in facilities and finance. Ask how the provider reports issues, arranges servicing and records work completed.
Compare who reviews output, reports faults, arranges access and approves servicing under each offer. Ask how much your facilities team must do and what the provider handles. Include that workload alongside the financial comparison.
Ask Verdant Solar to compare the available models
Verdant Solar’s commercial materials describe purchase and zero-upfront options. Ask which are currently available for your project, who provides the finance or owns the equipment, and which approvals are required. Confirm the terms in the offer prepared for your business.
Ask the team to show suitable options using the same customer data and to identify any financier or partner approval needed. The written proposal should distinguish confirmed scope from options being explored.
Tell Verdant Solar how much capital you want to retain, whether you want to own the equipment and how long you expect to stay. Ask the team to compare available models against those requirements rather than use another factory’s funding choice as the recommendation.
Check what happens if production changes
Long-term payments need to be considered against a factory whose electricity use may change. Fewer shifts or moving machinery to another building could reduce the benefit while leaving some obligations unchanged. Exploring those possibilities before choosing the model shows whether the arrangement gives the flexibility your business expects to need.
Suppose the factory reduces its working week after several years. An owned system may produce a different mix of direct use and surplus. A third-party arrangement may also be affected by its purchase or payment conditions. The commercial consequences depend on the actual documents.
Ask each provider to calculate payments and net savings using the same lower-demand forecast. Identify which payments stay fixed when electricity use falls. This lets management compare the financial effect of reduced production before committing to a long-term agreement.
