Residential Solar PPA’s

Residential Solar Power Purchase Agreement

Once you have made the choice to switch to home solar power you are faced with the sometimes confusing decision of how you are going to pay for your new home solar system. There are basically three financial options available when you make the switch to home solar power; Outright Purchase, Solar Leasing and Power Purchase Agreement (PPA). In this article we are going to focus on Solar Power Purchase Agreements

How Solar PPA's Work


Solar Power Purchase Agreements (SPPA).

  • What Is a Solar Power Purchase Agreement (SPPA)?
  • How do SPPAs Work?
  • How to qualify for a solar PPA

What is a Solar Power Purchase Agreement (PPA)

A Power Purchase Agreement is the monetary arrangement where a third party developer and a homeowner agree to place a home photovoltaic solar system on the roof of their home and purchase the energy produced by the system from the developer or service provider for a specified period of time. The homeowner then pays their monthly energy bills to the service provider. The homeowner’s new energy bill is usually considerably less than they are paying a conventional utility company and the price is guaranteed in advance for as long as 25 years.

PPA’s help the homeowner avoid some of the barriers faced when installing a solar energy system on their home. There are no upfront costs, system maintenance worries, and design, permitting or installation concerns. A home owner can profit from their roof from day one with a Solar Power Purchase Agreement.

How Solar PPA’s Work

Solar power distribution diagram

  • The Homeowner – A home owner decides to have home solar panels installed, usually on their roof and signs an agreement to with the service provider to buy the generated electrical power. The price the homeowner pays for their power is usually a fixed rate but may also include an escalator over the life of the contract to allow for a performance reduction as the solar system ages as well as inflation related costs of maintenance and system monitoring.
  • The Solar Service Provider – your service provider manages of all phases of the finanancing, installation, monitoring and maintenance of the home solar power system over the life of the contract. Solar service providers may work with their own “in-house” teams for installation and financing or  contract out some aspects of the overall services.
  • The Local Utility Company – Your local utility company allows for a connection from the home owners photovoltaic system to the grid. Grid connection is necessary to both provide electrical service when the home solar system cannot meet demand (like at night) and to also allow excess electricity to be sold back to the utility (that’s one of the ways the solar service provider makes their money).

Qualify For A Home Solar Power Purchase Agreement

Solar Power Purchase Agreements are not available in all areas and this is very basic description of what a PPA is and how it works. For more detailed information and to see if your home qualifies for a Home Solar Power Purchase Agreement please contact our solar advisors. Our experts are prepared to match you to the right program and provider in your area.