Solar Lease Vs PPA
Solar Financing Options For A Low-maintenance Solar Energy System
Many solar installers advertise solar lease or power purchase agreement (PPA) as an easy way to reduce your electricity bill. If you are interested in a simple, low-maintenance option for installing a solar energy system on your home, leasing solar panels is a good option for you.
How Do Solar Lease and PPA Work?
Solar lease and PPA are similar to renting your solar panel system. You enter into an agreement with the solar leasing company that entitles you to the benefits of the system (i.e., the energy that the solar panels generate) for the term of the contract, which is generally around 15 to 25 years.
Under these arrangements, the solar leasing company owns and maintains your solar panel system, so it is entitled to the rebates that are available for the solar panel system. Consumers can indirectly benefit from those savings through lower electricity rates.
Terms of agreement
The structure of your agreement will vary slightly depending on the type of solar lease/PPA you choose. Solar lease and PPA come with $0-down, prepaid, and custom down payment options are available to consumers. Lease and PPA terms vary greatly by installer, so explore multiple options to ensure that you choose the financing choice that best fits your needs.
What Does a Solar Lease Or PPA Look Like?
Solar lease agreements and PPA can appear more complicated than a solar loan or cash purchase because of the additional terms that are included, but they generally provide lessees with flexibility in the event that their circumstances change.
Common Terms Included In Solar Lease & PPA
1. Term Length
Residential solar leases are usually for 20 to 25 years. Commercial solar leases can be customized, and generally range from 7 to 20 years.
2. Performance & Maintenance
The solar leasing company will monitor the system's performance to ensure that it is operating correctly for the duration of the lease. They are also responsible for maintaining and repairing it, although solar panels require little to no maintenance over their lifetime.
Most solar leasing companies offer free online, smartphone, or tablet programs to track your solar panel system's performance.
4. Buying The System
You can buy the solar panel system at any time during the lease term at the price defined in your contract or its fair market value, whichever is higher.
5. Selling Your Home
If you sell your property, you can transfer the remainder of your lease to the homebuyer or buy the system from your leasing company yourself and include it in the sale of your property.
6. At The End Of The Term
When your agreement ends, you can either buy the system outright, have the leasing company remove it, or leave the system in place and renew the agreement with the owner.
Types Of Solar Leases & PPA
While solar lease and PPA are commonly offered as $0-down agreements, you may also encounter custom down payment or prepaid options as you shop for solar. Learn more about commonly offered solar lease/PPA structures, as well as the solar energy advantages and disadvantages.