May 06, 2024

What kind of partner should PV investment choose? How to avoid risks?

Today, distributed photovoltaics can not only obtain a certain amount of state subsidies, but also sell electricity for profits, so more and more people are eager to invest in photovoltaics. However, the three major risks also coexist with it, namely, the risk when choosing a cooperative company, the risk when choosing an investment region, and the risk when selecting a building.

What we share with you today is the most complex of these three risks and the most important thing to consider when choosing a partner company.

Type of owner and cooperation mode

The current cooperation model is divided into two types:

Mode 1: Roof lease mode: that is, the investor rents the roof of the owner and pays the rent agreed in advance.

Mode 2: Contract Energy Management Mode (EMC): that is, the investor rents the roof of the owner and sells the electricity generated by the PV modules to the owner at a price lower than the grid price. The remaining power is then integrated into the grid and sold to the grid.

When investors consider the cooperation model, they need to consider the selection of the owners.

In the distributed photovoltaic investment, we usually refer to the cooperative enterprise as the owner. The owners are mainly divided into two types: high-quality enterprises represented by state-owned enterprises and listed companies, and other companies.

How to avoid risks

For interested investors, the first thing to be confirmed is the cooperation model of PV investment, adopting different cooperation models, and facing different risks.

If the two sides cooperate in the contract energy management mode, the interests of the owners are directly related to the power generation of photovoltaic modules. That is, the higher the power generation of photovoltaic modules, the lower the price that the owners can use. This will increase the owner’s ability to maintain the PV modules. Subjective initiative. If the two sides cooperate with the roof rental model, the owner's interests are independent of the components, which makes the owner's subjective initiative to maintain the components minimal.

In contrast, the strong subjective initiative of the owners for PV modules helps investors to maintain the components and reduce the risk of abnormal component loss. Therefore, the contract energy management contract has become a more cooperative mode for investors.

Compared to the simpler roof lease model, once the investor plans to use the contract energy management cooperation model, more measures should be taken to reduce the owner's risk of delaying the electricity bill.

First, the selection of high-level partners is the best way to reduce the default on electricity bills. State-owned enterprises and listed companies have become the best partners, because the state-owned enterprises’ electricity bills are paid by the government, and there is no problem of defaulting on the electricity charges of investors. For listed companies, the negative social impact caused by the delay in electricity bills will largely cause fluctuations in their stock prices. Once the stock price fluctuates, its value will be much higher than the value of the defaulted tariff, so the listed companies do not Will do this kind of gains and losses.

Of course, when we look for partners, we will also consider companies other than the above two companies. For such companies, investors generally do credit evaluations with third-party credit bureaus to reduce their risk.

After determining the cooperation model and partners, investors can still reduce the risk of owner's unexcused arrears of electricity charges through the choice of charging methods or some legal means. Here are three examples:

Method one: Apply for the grid to collect electricity charges. Investors can apply for electricity collection from the grid. Taking into account the delay in the electricity tariff of the grid will lead to power outage affecting the daily work, the possibility of the owners defaulting on the tariff will be greatly reduced. However, such fees and charges were only tested in some regions and have not yet been widely popularized.

Method 2: Banks form a regulatory mechanism. For example, a part of the deposit may be reserved in the bank. If the owner defaults on the electricity charge, the investor may deduct the arrears of the electricity charge from the deposit.

Method 3: Sign a supplementary agreement. For example, it can be stipulated in the agreement that if the owners have behaviors that are in arrears with the electricity charges, the investors have the right to change the form of cooperation from the self-use of self-use Internet access to the full amount of Internet access.

Of all the risks of distributed PV investment, the most deadly is the change of ownership of the roof due to bankruptcy and other reasons.

For such risks, if the company is in the park, the investor can sign an agreement with the park in advance to ensure that after the change of the roof's property rights, the enterprises that later took over the property rights accept the PV modules, or allow the investors to convert the cooperation form into full online access. Although the above method can reduce the risk of roof changing, the solution is still very limited and investors are required to pay special attention.

Proper selection of cooperation models, cooperative enterprises, and fee collection methods, while seeking certain legal guarantees, are all indispensable when making decisions on distributed photovoltaic investment. A single measure does not prevent the risk from happening. A comprehensive and thorough plan will minimize the risk.

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