Under this model, Vuselela Energy will finance the SPV and provide an energy conversion service to the host company for a monthly or quarterly payment.
Vuselela will build and operate the SPV co-generation plant to the project host for a pre agreed period after which the project host may elect to take full ownership of the plant at fair value or extend the ECA period.
Vuselela will therefore provide the full capital requirement for the establishment of the project and be responsible for its operation and maintenance for the contracted period.
This model includes the following features:
- Vuselela will provide the full Capital Investment for establishment of the plant.
- Land and utilities will be made available to the SPV at zero cost.
- An “over-the-fence” supply of waste energy will be provided to the SPV at zero cost.
- The electricity generated by the SPV will be supplied to the project host at zero cost.
- Vuselela will receive a pre-determined regular payment regardless of operating and supply conditions.
- CERs will accrue to Vuselela and the host at pre-agreed levels.
- This model can be considered similar to an Operational Lease based on a toll treatment arrangement.
- ECA payments may have significant tax benefits to the project host.
- Vuselela will assume full responsibility for the carbon asset management activities.
It is worthwhile to note that because of the complications introduced by a PPA under the BOOT arrangement, Vuselela in principle has been promoting the ECA model to all the target clients with excellent results.