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Lumora

Finance · 3 min read

Purchase, lease or power purchase agreement: which suits you

Three ways to pay for the same system, and the questions that decide between them.

Sanne Bakker

Chief Financial Officer ·

The system on your roof is the same whichever way you pay for it. What changes is who owns it, who carries the risk and when the savings start. Most of our clients choose between three options.

Purchase

You pay for the system and own it from day one. Every kWh it makes is yours, so the lifetime return is highest. You can add a service plan or run maintenance yourself. Purchase suits businesses that own their building, plan to stay and have capital to invest at a return they are happy with.

Lease

You pay a fixed monthly amount over seven to twelve years, and we own, insure and maintain the system during the term. On a well-sized system the monthly saving is often higher than the payment from the first month. At the end of the term you can take ownership.

Power purchase agreement

We build, own and operate the system on your site, and you buy the power it makes at a fixed price per kWh, below your grid price, for ten to twenty years. You pay nothing upfront and carry no performance risk: if the system makes less, you pay less.

The three options side by side
PurchaseLeasePower purchase agreement
Upfront costFull system costNoneNone
Who owns itYouUs, then youUs
MaintenanceYour choiceIncludedIncluded
You payOnceA fixed monthly amountA fixed price per kWh made
Lifetime returnHighestMiddleLowest, with no risk

Questions that decide it

  • Do you own the building? If you lease it, a power purchase agreement with your landlord's consent is often simplest.
  • How long will you stay? Purchase pays best over the system's full life. If you may move within ten years, a lease or agreement can transfer more easily.
  • Where else could the capital go? If your business earns more on capital than the system's return, keep it there and lease.
  • How will it sit on your balance sheet? Accounting treatment differs between options and countries. Ask your accountant before you choose.

Written by

Sanne Bakker

Chief Financial Officer

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Site assessment

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