Solar Home Financing 101: What’s a Solar Power Purchase Agreement (Solar PPA)?

We’ve already talked about financing home solar systems with solar leases and pre-paid solar leases. Those are two very common ways to finance going solar today in several states. But there’s one more popular solar financing method, and it’s called a solar power purchase agreement or (solar PPA).

A solar PPA is similar to a solar lease, but with one difference: Instead of a flat monthly payment that estimates your solar production, you only pay for the solar energy actually produced by your solar system—and at a lower price than your utility’s power rates.

To see why this is valuable, we have to talk about utility rates. (Sorry!) Utilities measure your energy usage in kilowatt-hours (kWhs), and you may pay your utility anywhere between about 10 cents per kWh to as much as 45 cents per kWh, depending on your area and your usage. With electric rates like that, your bill can add up to hundreds of dollars a month, especially in California, Hawaii, and other states with tiered electric rates.

And that’s where solar comes in. With a solar PPA, those higher rates are replaced with a flat solar PPA rate that’s always less. So, instead of paying for dirty and expensive kWhs from your utility, you’re paying for cheaper, clean solar kWhs generated from your roof.

And there are even more advantages to a solar PPA:

No up-front costs. Like a solar lease, you can go solar with no money down, although you can get an even lower solar PPA rate (and more savings) if you pay a little bit up front. Talk to your REC Solar consultant about this option.

Free maintenance and repairs. You also get free maintenance, solar monitoring, and insurance on your solar system, so no repair costs to worry about.

A transferable contract. Also like a solar lease, you don’t own the solar system, but are purchasing a 20 year service contract that is transferable. So, if and when you move, the new owner will benefit from the home’s solar energy savings. At the end of the contract, you or the new buyer can purchase the system at fair market value, or have the solar PPA company uninstall it for free.

Also similar to a solar lease, there may or may not be an annual escalator of 2% to 3%, depending on the area where you live and the solar PPA provider. But your utility rates will usually rise by that amount too, so your savings will stay the same throughout the contract.

So, how much will you actually save with a solar PPA? The answer is thousands of dollars over the course of 20 years, but to find out exactly how much, you need to get a free, no-hassle solar PPA quote for your home. It’s really easy and takes just 20 minutes, so worst case, you learn about the solar PPA savings for your home.

And the best case? You hear the numbers and go “Wow!” and sign up with REC Solar and save thousands of dollars on your electric bill. Go for it.

This entry was posted in General. Bookmark the permalink.

2 Responses to Solar Home Financing 101: What’s a Solar Power Purchase Agreement (Solar PPA)?

  1. Pingback: Why Solar Installations Are Growing So Fast in the Middle Class | REC Solar Blog

  2. Pingback: How to Calculate the 30% Federal Investment Tax Credit for Solar | REC Solar Blog

Leave a Reply