Power Purchase Agreement (PPA)


What is the difference between Power Purchase Agreement (PPA) and Solar Lease financing?

Based on your state of residence and utility provider, residential financing offering is either a lease or a Power Purchase Agreement. Both types of financing are offered through most solar companies and both programs let you get started with zero or minimal upfront cost. Both financing plans are commonly used in the solar industry. With a Power Purchase Agreement (PPA), you pay a flat rate - solely paying for the power your solar system generates. With a lease, you pay a steady, fixed monthly payment. With a lease, though, you can make an upfront payment if you choose to do so. One easy-to-understand comparison is car rental agreements. A solar lease is like renting a car with unlimited mileage. A Power Purchase Agreement (PPA) is like paying for only the actual miles driven.

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What is a Power Purchase Agreement (PPA)? What are its benefits?

A PPA is an agreement between you and the solar provider in which the solar company covers the full cost of a solar system. In return, you agree to buy the power produced by the system. This allows you to avoid a large upfront cost. You will be "locking in" your electricity rate for the next decade. No matter how much the cost of utility electricity rises, you can be rest assured that your Power Purchase Agreement (PPA) rate is fixed and predictable for years to come!

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What are my options at the end of the Power Purchase Agreement (PPA) term?

A PPA is a very flexible way to go solar. When your Power Purchase Agreement (PPA) ends, you have several viable options:

  • You can upgrade to a new system with the latest solar technology under a new Power Purchase Agreement (PPA).
  • You can ask your solar provider to remove your system for free.
  • You have the option (but no obligation) to purchase the system at the end of the term for fair market value.
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    What if I move to a new home before the end of the Power Purchase Agreement (PPA)?

    There are a number of options if you move before the end of your agreement:

  • You can move the solar system to your new home if it is in the same utility district.
  • You can pass on the solar system to the new owners in two ways:
  • The great thing about both of these options is that solar homes typically have a higher resale value due to their lowered electricity costs.

    1. You can transfer the Power Purchase Agreement (PPA) to the new homeowners if they qualify.
    2. You can also pay off the balance of your Power Purchase Agreement (PPA) and include it in the asking price.

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    Can I decide to buy the system later?

    Yes. The Power Purchase Agreement (PPA) provides you with an option (but no obligation) to purchase the system at the end of the term for its fair market value.

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    Who maintains the panels?

    Free monitoring service is included for the life of the agreement. The monitoring service will alert you and your solar company of any changes in performance. If they see a problem, they will give you a call to help diagnose the problem and dispatch a repair team if needed.

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    What about warranties?

    Every Power Purchase Agreement (PPA) includes an extended warranty on workmanship and hardware through the end of your agreement. Most solar companies will repair or replace broken components at no cost to you. For instance, if your inverter needs to be replaced your solar provider will cover the repair or replacement.

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    How do I know my panels are operating properly?

    Power Purchase Agreement (PPA) includes a "Performance Guarantee" that your system will produce as much electricity as they promise, or the solar provider will rectify the situation for free.

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