Your Guide to Solar Power Purchase Agreements


Most people want new renewable power to address climate change. Also, they’re looking for alternatives to reduce high electricity bills. Thus, they’re beginning to consider power purchase agreements (PPAs).

But what is a PPA, what are its benefits and drawbacks?

You can find answers to these questions when you read this guide on solar power purchase agreements.

By the time you’re reading the last sentence, you’ll be armed and equipped with the information to determine if solar PPA is right for you.

Meaning of Solar Power Purchase Agreements

A power purchase agreement is a contract where a solar firm pays for the entire cost of putting up a solar system on your house. Then, it charges you only for the power generated.

The goal is that the customer will not have to pay for the system upfront. But will benefit from lower utility fees. A residential power purchase agreement should last between 20 to 25 years.

The homeowner has the option to purchase the system at any time throughout the lease period. When the agreement is over, you have the option of buying the system, removing it, or renewing the contract.

Benefits of a Solar Power Purchase Agreement

Energy saving is about 10-30%.

Zero or very small upfront costs: The Company is responsible for the initial expenses of sizing, acquiring, and installing the solar PV system. The homeowner may adopt solar with no upfront expenditure.

The firm you’re leasing from keeping an eye on the system and provide maintenance and repairs.

The more the energy bills in your region, the more savings you get through a PPA.

There’s a possibility of an increased property value: Installing a solar PV system increases a residential property’s value. Because of the long-term nature of these agreements, PPAs can be transferred with the property. This allows homeowners to invest in their houses at little or no expense.

You can visit to learn more about energy saving with no upfront costs.

Drawbacks of Solar Power Purchase Agreements

The solar firms will benefit from all solar tax credits (ITC) and other monetary benefits. This isn’t a significant disadvantage. This is because you’ll still save money on your power bill.

It makes moving houses a little more difficult. You must transfer the solar system to the next homeowner. This might generate several complications. This is because PPAs are typically for more than 20 years.

The PPA contract generally contains a price escalation that raises the amount you pay for solar yearly. A common price escalation is 3% each year. Even with the cost rise, purchasing energy through a PPA is generally significantly less expensive than paying your electricity company.

Do You Now Think Solar PPA is Right for You?

Solar finance has become more accessible in recent years. When you’re financing solar panels, you will receive energy savings and tax rebates.

Solar power purchase agreements might still make sense, especially if you have weak credit. Also, it’s good if you reside in a region where power bills are exceptionally high.

You might start reaping the advantages of solar energy for your house with little to no money down. PPAs might be rather limiting. But they aren’t the worst way to go solar.

We hope you’ve learned something new. If so, please keep checking our website for more informative articles.


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