A Power Purchase Agreement (PPA) is a way for homeowners and businesses to benefit from solar energy without purchasing a solar energy system outright. Instead of buying the equipment, you agree to purchase the electricity the system produces at a predetermined rate over a set period of time.
This approach removes the upfront cost barrier while providing predictable energy pricing and a simpler path to going solar.
What Is a Power Purchase Agreement?
A Power Purchase Agreement is a long-term agreement between a property owner and a solar provider. Under this arrangement, the solar provider designs, owns, and maintains the solar energy system installed on your property.
Rather than owning the panels, you pay only for the electricity the system generates. In many cases, the agreed-upon rate is lower than what you currently pay your utility, allowing for immediate savings.
How Does a PPA Work?
System Design and Evaluation
The process begins with a review of your energy usage, roof structure, and available sunlight. This information is used to design a solar energy system sized specifically for your property.
Installation and Ownership
Once approved, the system is installed on your property. The solar provider remains the owner of the equipment for the duration of the agreement and is responsible for system performance.
Energy Production and Usage
During daylight hours, the solar system produces electricity that is used to power your home or business first. Any additional power you need beyond what the system produces is automatically supplied by the utility grid.
Monthly Billing
You are billed based on the amount of electricity the system produces, not a flat monthly fee. Higher production results in higher usage, while lower production results in lower costs.
Benefits of Choosing a Solar PPA
A Power Purchase Agreement offers a streamlined way to access solar energy while minimizing financial risk and ongoing responsibility. Rather than focusing on system ownership, a PPA allows you to benefit from predictable pricing, professional system management, and performance-based savings from day one.
- No Upfront Investment – Go solar without the large upfront cost typically associated with purchasing a system. The solar provider covers equipment, labor, and installation.
- Predictable Energy Pricing – PPA rates are usually fixed or increase gradually over time, helping protect against unpredictable utility rate increases.
- Maintenance and Monitoring Included – System monitoring, maintenance, and repairs are handled by the solar provider, reducing responsibility and risk for the property owner.
- Performance-Based Savings – You only pay for the electricity the system produces, aligning system performance directly with your monthly energy costs.
Important Considerations Before Choosing a PPA
Long-Term Agreement
PPAs are typically long help are long-term agreements, making them best suited for property owners planning to stay in place for several years.
System Ownership
The solar provider retains ownership of the system during the agreement term. Incentives and tax credits usually apply to the system owner rather than the property owner.
Property Transfer
If you sell your property, the agreement may need to be transferred to the new owner. Many PPAs are structured to allow for this, but it is important to understand the terms upfront.
Who Is a Good Candidate for a Power Purchase Agreement?
A Power Purchase Agreement may be a strong fit if you want to lower energy costs without a major upfront expense. It is well-suited for homeowners and businesses that prefer predictable monthly energy pricing and do not want responsibility for system maintenance.
PPAs are especially attractive for those focused on cash flow stability and reduced financial risk.
How a PPA Compares to Other Solar Options
Compared to purchasing a system outright or using financing, a PPA prioritizes accessibility and simplicity. Ownership options may offer greater long-term returns, while PPAs focus on lowering barriers to entry and minimizing responsibility.
Choosing the right option depends on your financial goals, tax situation, and long-term plans.
Ready to See If a PPA Makes Sense for You?
A Power Purchase Agreement can be an effective way to take advantage of solar energy while avoiding upfront costs and ongoing maintenance responsibilities. The best way to determine if a PPA is right for your property is through a personalized evaluation.
Solr Standard helps homeowners and businesses understand their solar options clearly and confidently. Contact Solr Standard today to schedule a consultation and find out whether a Power Purchase Agreement is the right path for your energy goals.