Solar PPAs, or Power Purchase Agreements, are one of the many options available to those looking to make the switch to solar, but most people don’t know exactly what a Solar PPA is or how it might benefit them to leverage this particular solar opportunity. To help you navigate your solar project, let’s explore just what a PPA is, how it works, and how it fits into the larger landscape of solar energy.

What is a Solar PPA?

A Solar PPA, or Power Purchase Agreement, is a financial arrangement between a customer and a provider / developer wherein a solar system is installed on the customer’s home or property at little to no upfront cost, and then the generated power is sold to the customer at a fixed rate that is lower than the cost of available utility power.

How does a Solar PPA work?

Part of the importance of exploring solar opportunities in an educational context is that it offers us a chance to dispel misinformation from the industry. It is unfortunate that grifters have occasionally targeted the public with ads for “free solar” because it makes it harder to talk about legitimate options in the process.

With a Solar PPA, you are able to access a solar system at little to no cost, not because it is free, but because you are working with a provider who will install and operate the system on your behalf, offering you the opportunity to purchase power at a fixed rate which is lower than the current utility power price.

Lease vs. PPA

Some of these PPAs are true leases, while others offer paths to ownership for the customer, should they decide they want to acquire the system rights in the future. However you slice it, this system isn’t free, but it does allow multiple parties to benefit from the power and value of a solar installation, with a reduced barrier to entry that increases the accessibility of clean energy generation.

Who is a Solar PPA for?

A Solar PPA is, at its core, an accessibility play. Like a lot of things, buying big ticket items in full with cash is great, but realistically, not everyone can afford to do this. Just as loans and mortgages are accessibility options to make home ownership possible for more people, Solar PPAs are an accessibility option for those who want to access the benefits of clean energy generation without the upfront cost of a system purchase. With a Solar PPA, you start saving the moment your system is on your roof, as the fixed rate from the system on your home is lower than the currently skyrocketing price of utility power. With multiple rate increases already in play this year alone, having access to a PPA becomes a much more attractive prospect for many homeowners.

Solar PPAs also have a very low barrier to entry - the system is designed with your usage in mind, but the financing is handled by your new energy provider, so it’s a quick switch from variable monthly bills to a predictable, reliable, clean energy source. Not to mention, because the system is owned by a third party, the responsibility of system maintenance also falls to this third party. You won’t be on the hook for any repairs if there is an issue with the system, so you can use your power with peace of mind!

Solar PPAs in 2024

Whether you purchase a solar system outright or enter into a Solar PPA with a trusted provider, there’s no question that energy rates are rising in 2024. No matter what direction you decide to go in with your solar installation, access to clean renewable energy is becoming more important by the day. If you’re interested in saving money with a solar system purchase or PPA, our expert consultants can help you decide which opportunity is best for your needs and budget.