A solar ppa, or power purchase agreement, is a financing option that allows homeowners to lease a renewable energy system. This is one way to reduce electricity costs and to go green, without having a system purchased outright.
Solar options are numerous, so it's crucial to decide what you want to do before making a decision. Each option comes with both positives and negatives.
Why You should Consider a PPA
A solar ppa agreement is a contract between you, the customer, and whoever installs your solar panels and finances them. A monthly payment is made to the company that covers both the equipment cost and the energy generated. The contract must outline the many benefits you'll receive including how much power your solar panels are expected to produce.
Check to see if your system generates an amount of energy comparable to your average annual household electricity usage. This will give you a better idea of the system's performance and help to ensure it gives a return on investment.
The contract should also provide an explanation of the billing relationship with the utility company, which may include net metering or time-of-use rates. This information will help you determine the best way to manage your energy bills.
Leases: How They Work
For homeowners looking to cut their electric bills, leasing a solar system is an excellent option. The solution can also work for businesses who are looking to invest in an eco-friendly energy strategy.
People who are looking to benefit from tax incentives and credits can also choose this option. In Texas, for example, you can get solar panel funding incentives to reduce the cost of your system.
If you're considering leasing a solar system, choose a provider that has experience with such programs. They'll be able to guide you through the process and give you the best results.
If you have a PPA/lease, make sure to check the clause that allows your monthly payments to increase every year. This is important if you are planning to sell the house in future.
A number of anecdotal accounts indicate that houses with solar leases and PPAs that include an escalator contract are less appealing to prospective home buyers.
A solar PPA has another disadvantage: it is difficult to change your mind after your contract ends. Most ppa agreements only allow for contract modifications with the permission of the third party financing company.