What is PPA? Explained in 5 Minutes
Power Purchase Agreement — the contract that lets businesses use solar energy without investing a single baht
This article covers PPA in the solar energy context (Power Purchase Agreement). If you are looking for the medical PPA (Progressive Primary Aphasia), please consult a medical specialist or trusted medical sources.
What is PPA? A Short Definition
A Power Purchase Agreement (PPA) is a 15-25 year contract under which a solar provider such as CapSolar installs and maintains a rooftop solar system on a customer's facility at zero cost. The customer pays only for the electricity produced — typically 10-30% below PEA/MEA grid tariffs.
What is PPA? — A Simple Explanation
PPA stands for Power Purchase Agreement, or simply a "power buying contract." In plain terms, someone installs a solar panel system on your factory or building rooftop — and you don't pay for the installation. You simply buy the electricity it produces at a rate cheaper than your normal electricity bill.
Think of it this way — PPA is like "renting" a solar system. Compare it to housing: if you buy a house (EPC), you pay a large sum upfront but own it. If you rent (PPA), you pay a monthly fee that's cheaper than mortgage payments, and move in right away.
Simple Analogy
For businesses that want to save on electricity but don't want to invest a large sum, PPA is the smartest choice. You start saving from day one when the system goes live, with zero financial risk. See CapSolar's Solar PPA service.
Key PPA Numbers in Thailand
- Discount vs PEA/MEA tariff
- 10-30%
- Typical contract term
- 15-25 years
- CapSolar PPA rate range
- 2.50-3.20 THB/kWh
Source: Krungsri Research, Direct PPA 2025
Source: ERC guidelines + CapSolar internal data 2026
Source: CapSolar internal data 2026 (varies by system size and load profile)
How Does PPA Work?
01Site Assessment
Engineers survey your roof and analyze your electricity usage to design the most suitable system
02System Installation
The PPA provider invests in and installs the entire solar system. You don't pay a single baht.
03Power Generation
Solar panels start generating electricity from sunlight, feeding power directly into your building's electrical system
04You Use Power
You use solar electricity normally, just like grid power from PEA/MEA, but at a 10-30% discount
05Pay as You Use
You pay for solar electricity based on actual usage, at the discounted rate agreed in the contract. Simple and transparent.
Who is PPA For?
Suitable For
- Factories with large roof areas (1,000+ sqm)
- Businesses that don't want to invest large capital
- Companies wanting immediate electricity savings
- Organizations wanting to reduce carbon footprint for ESG
May Not Be Suitable
- Leased premises with less than 10 years remaining on lease
- Very small roofs (less than 500 sqm)
- Buildings with insufficient roof structural strength
PPA vs EPC — Comparing Two Models
| Comparison | PPA | EPC |
|---|---|---|
| Investment | 0 THB — No investment needed | 3-30M THB depending on size |
| Electricity Savings | 10-30% immediately | 50-70% after payback |
| Ownership | Provider owns the system | You own the system 100% |
| Contract Period | 15-25 years | No binding contract |
| Maintenance | Provider handles everything | Your responsibility |
| Contract / Warranty | 15-25 years, performance warranty throughout | Panels 25 years / inverter 10-12 years |
| Financial risk | CapSolar carries performance + technology risk | Customer bears the risk |
| Best fit for | Businesses that want to cut opex without capex + fast ESG progress | Businesses with capex budget + seeking maximum long-term ROI |
Start a free PPA assessment · See the full PPA vs EPC 12-dimension comparison
Top Google Questions (People Also Ask)
- What is a PPA contract?
- A PPA contract is a 15-25 year electricity sale agreement between a solar installer (power producer) and a building owner (power buyer). It covers the per-kWh price, annual escalator, system ownership terms after the contract ends, performance warranty, and what happens if the customer sells the building mid-term.
- What is the PPA payment? Who pays whom?
- "PPA money" is the monthly electricity fee the user (e.g., a factory) pays to the solar installer based on the kWh actually produced by the system. It is not equipment financing and not a roof rental. Example: 10,000 kWh/month × 2.80 THB/kWh = 28,000 THB. If the system produces nothing in a given month, the user owes nothing.
- What is a PPA assessment? How many steps?
- A PPA assessment is the process by which a provider evaluates whether your business is a good fit for PPA. It covers: (1) collecting the last 12 months of PEA/MEA bills, (2) a rooftop survey and solar irradiance measurement, (3) a preliminary system-size design, and (4) a proposal with the PPA rate and a 20-year savings projection. Total time: 1-2 weeks.
- Is PPA a disease?
- In an energy context, PPA is not a disease — it stands for Power Purchase Agreement. In a medical context, PPA refers to Progressive Primary Aphasia, a neurological condition requiring specialist care. This article only discusses PPA in the energy sense.
Written and Reviewed by the CapSolar Team
This article is authored by CapSolar's in-house engineering and advisory team — the same team that develops and operates EPC + PPA projects across Thailand totalling 16.5 MWp across 8 sites. Combined, our team has 15+ years of on-the-ground experience covering system design, PPA contract negotiation, ERC / PEA / MEA compliance, and long-term O&M.
CapSolar PPA — The Best Choice for Your Business
0 THB Investment
We invest everything — from equipment and installation to maintenance
Save 10-30%
Start saving on electricity from day one — no payback period to wait for
25-Year Guarantee
Long-term contract with comprehensive warranty — peace of mind throughout
FAQ
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Before Signing PPA — Understand Permits
PEA/MEA + อ.6 + รง.4 + BOI — full 4-6 month path
Interested in PPA for Your Business?
Consult with CapSolar experts for free. Get a PPA proposal customized for your business.