Understanding the Solar ZERO CAPEX Model
What is the ZERO CAPEX model?

In the ZERO CAPEX model, a long-term agreement must be signed for the sale and purchase of electricity generated from the solar PV system. First, a Registered PV Investor (RPVI) will finance the capital expenditure (CapEx) of installing a solar PV system. On top of that, they are also responsible for the operation and maintenance of the system for the life of the contract. Meanwhile, the customer only pays for the power generated at an agreed tariff for a fixed tenure. This agreement can either be the Power Purchase Agreement (PPA) or the Supply Agreement with Renewable Energy (SARE). Under either of these agreements, the entire operation and maintenance for the agreed life term of the system is taken care of by the RPVI to ensure the system is optimised to maximise the power output. As there is zero investment and no associated performance risks, the customer enjoys considerable risk-free savings.

The ZERO CAPEX model offers an option to transfer solar PV system ownership to the customer based on agreed terms with the RPVI.

What is PPA?

The Power Purchase Agreement (PPA is a long-term agreement between a Registered PV Investor (RPVI) and a business owner in which the RPVI installs, operates and maintains the solar PV system in the premise of the business owner while the business owner purchases the electricity generated from the solar PV system for its own consumption at a lower rate than the usual rate from your electricity distribution provider for an agreed duration.

What is SARE?

The Supply Agreement with Renewable Energy (SARE) is a tripartite agreement between a third-party Investor/Owner, TNB (TNBX as its billing agent) and the customer. The agreement details out the contract years, the solar sen/kWh price as well as the covenants and obligations of each party. TNB acts as only the contracting and billing agent in this contract. The SARE arrangement is endorsed by the Energy Commission (ST) of Malaysia and Sustainable Energy Development Authority (SEDA).

Who should adopt ZERO CAPEX model?

ZERO CAPEX is a preferred model for companies that do not want to invest in non-core operations. It’s also convenient for them to manage these assets through a third-party player. The ZERO CAPEX model is a preferred choice for a lot of C&I consumers, especially investment grade companies with low-risk appetite and with capital constraints. In terms of management approval timelines, ZERO CAPEX will likely see a smoother approval process than OUTRIGHT PURCHASE. Moreover, an organisation that is unwilling or can’t afford the operation and maintenance of the system including dedicated personnel for the same will prefer the ZERO CAPEX model.

POWER PURCHASE
AGREEMENT (PPA)

VS

SUPPLY AGREEMENT WITH
ENERGY (SARE)

2 parties involved:
Solar PV Investor & You

Parties Involved

3 parties involved:
Solar PV Investor, You & TNBX
Monthly electricity usage is
paid via the agreed payment
mode with the Solar PV Investor

Payment Mode

Monthly electricity usage is
paid via TNB electricity bill.
TNB will settle with
Solar PV Investor based on
the terms stated in SARE

POWER PURCHASE
AGREEMENT (PPA)

Parties Involved

2 parties involved:
Solar PV Investor & You

Payment Mode

Monthly electricity usage is
paid via the agreed payment
mode with the Solar PV Investor


SUPPLY AGREEMENT WITH
ENERGY (SARE)

Parties Involved

3 parties involved:
Solar PV Investor, You & TNBX

Payment Mode

Monthly electricity usage is
paid via TNB electricity bill.
TNB will settle with
Solar PV Investor based on
the terms stated in SARE