What Is a Solar Power Purchase Agreement (PPA)?
Feb. 06, 2024
A Power Purchase Agreement (PPA) is the most affordable way to install residential solar panels. With a PPA, you don’t have to make an upfront investment or take out a loan. Instead, you pay a low monthly fee for the installation and use of a home solar panel system, funded by a leasing company that will maintain ownership of the system.
Boston Solar offers Power Purchase Agreements to make solar energy more affordable and accessible to New England homeowners. Keep reading to learn more about PPAs and whether a PPA is the right solar financing option for you.
How Does a Power Purchase Agreement Work?
A Power Purchase Agreement is an agreement between you and a solar leasing company. When you enter into a PPA, the leasing company will pay to design, permit, install, and activate a solar energy system for your roof. You don’t pay anything upfront. Instead, you pay a low monthly fee to use the solar panels. The payment structure is similar to that of a solar loan, but you don’t have to take on debt to enter into a PPA.
How Much Do You Save with a Power Purchase Agreement?
As with any solar installation, your savings will depend on several factors, including how much electricity your solar panels generate and how much you currently spend on electricity. That said, a PPA is designed to save you money immediately. The money you save on your electric bills by generating power with solar panels will be greater than your monthly PPA payments, resulting in immediate savings. With a PPA, your electricity costs are stable, affordable, and predictable.
Is a Power Purchase Agreement Right for You?
A Power Purchase Agreement allows you to enjoy the financial and environmental benefits of solar power without having to spend any money upfront or take on debt.
- No upfront cost - You don’t pay anything upfront to go solar with a PPA. The leasing company will cover the initial costs.
- Low monthly payments - PPA payments are low and predictable so you can lock in your electricity costs and avoid utility rate increases.
- No maintenance costs - Since the leasing company owns the solar panels, they are responsible for service and maintenance, not you.
- Production guarantee - If your solar panels don’t meet a 90% production guarantee, you’ll be credited for the difference.
- Affordable path to renewable energy use - Use clean, renewable energy to power your home without having to pay for a solar installation.
PPA vs Solar Ownership: What’s the Difference?
The main difference between a PPA and other solar financing options is ownership. When you buy your solar panels with a cash payment or solar loan, you own the system. When you install solar with a PPA, a third-party leasing company owns the system.
The benefit is low monthly payments for you without any upfront costs, loan fees, or interest payments. The total cost of a PPA throughout its lifetime is typically similar to the cost of a solar loan, but you don’t have to take on debt to benefit.
The downside is that you are not eligible for most solar incentives. Solar incentives like the federal solar tax credit are designed to incentivize solar ownership. Since you don’t own the system under a PPA, you cannot claim the solar tax credit. Most solar incentives (except net metering) operate the same way.
Find the Best Solar Financing Option for Your Home
Boston Solar is here to help you go solar in a way that works for you. We offer a wide range of financing options so you can choose a payment plan that fits your budget. If you want to benefit from lower electric bills and clean energy without having to make an upfront investment or take out a loan, a PPA is a great option. You’ll have all the benefits of solar panels for your home at an easy, affordable cost that’s spread out over time.
Go solar for $0 down! Call 617-858-1645 or contact us to see if a Power Purchase Agreement is right for you.