Compare Solar Panel Leasing vs PPA (Power Purchase Agreement)

What is a PPA?

A Power Purchase Agreement or PPA is a program offered by many solar installation companies as a means to installing the equipment to drastically cut your energy costs. Customers realize an approximate savings of ten to thirty percent for their electricity and utility bill. A PPA agreement consist of purchasing the solar power that the system generates at a price that is set per kWh.

Clients can enter a PPA with a low cost to get started if they have stellar credit. These agreements commonly work in 15 to 20 year terms whereby the owner is locked in; however, the agreement can be transferred to a new owner in the event the property sells.

With the PPA, you remain tied into the grid; if you require extra energy consumption that your panels are unable to produce; your utility company has your back. The company offering the PPA will handle any repairs or maintenance concerns and is responsible for monitoring your solar energy system.

Some PPA companies charge their customers a basic electrical rate. This amount may be a flat rate or gradually rise during your term. An option to purchase may be available at the end of your term for a set price per watt. It is always possible to try and negotiate with the company to try and ensure the best price. The owner of the PPA is who will receive any RECs or Renewable Energy Credits or tax benefits and rebates, not the customer. If you are looking to gain these particular savings, get some quotes on purchasing your panels and inverters out right.

Solar Lease Options

Many companies are offering customers the chance to enter into a solar lease with $0 down. Consumers enjoy immediately lower rates on their energy consumption; however the solar leasing company maintains and owns the system. They are the ones who will realize the financial incentives in terms of tax breaks and rebates etc. Leasing companies will handle all of the subsequent maintenance and installation to protect their investment. With a solar lease agreement, you will pay a monthly fee or rent of the solar equipment. Most residential solar leases run on a 20 to 25 year term. You may transfer this payment to a new homebuyer in the event of your property selling. Others may wish to purchase the equipment out right and include it in the sale of their property.

Drastic Price Differences

Depending on where you reside and what kind of equipment the company utilizes will drastically influence your total bills. Receiving multiple quotes is the most effective way to ensure your overall efficiency. For example, if you have a south facing roof with adequate panel capacity that is ideal. However, many residential and commercial customers rely on a system that is installed from the ground due to trees, location or slope.

A reputable solar equipment company will be able to break down your monthly and overall calculations. They will be able to tell you the best case scenario for what you wish to achieve.

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