Power Purchase Agreements (PPAs)

As the demand for clean, affordable energy continues to rise, more property owners are turning to solar power as a way to reduce their electricity bills and carbon footprint. However, for many, the high upfront costs of purchasing a solar system can be a major barrier. A Power Purchase Agreement (PPA) offers a practical, low-risk alternative that enables homeowners and businesses to access the benefits of solar energy without owning the panels themselves.

A solar PPA is a financial arrangement in which a third-party solar provider designs, installs, owns, and maintains a photovoltaic (PV) system on your property. In exchange, you agree to purchase the electricity generated by the system at a fixed rate per kilowatt-hour (kWh), often significantly lower than the local utility rates. Unlike traditional solar leases that charge a fixed monthly fee regardless of energy use, PPAs are performance-based as you only pay for the electricity the system actually produces. This makes it a cost-effective and scalable solution, particularly for larger buildings, commercial rooftops, or institutions looking to manage long-term energy costs more effectively.

The process is straightforward. Once a solar company assesses your site and installs the system, you sign a long-term agreement, usually 15 to 25 years, to buy the solar electricity it generates. Throughout the contract period, you’ll continue to receive a combination of solar power and utility grid power, depending on your energy needs and system output. Importantly, the solar provider is responsible for all aspects of the system, including performance monitoring, repairs, and insurance, so you won’t have to worry about maintenance or unexpected expenses.

There are several advantages to choosing a solar PPA. First, most agreements require little to no upfront cost, allowing you to begin saving on electricity from day one. Second, the energy rate you pay through a PPA is typically 10% to 30% lower than your current utility tariff, resulting in substantial savings over time. Third, since the provider owns the system, you avoid the burden of ownership responsibilities, such as repair costs or system upgrades. Lastly, PPAs offer a stable and predictable energy pricing structure, often with fixed or controlled rates, shielding you from fluctuating electricity prices.

However, it’s important to understand the structure of a typical PPA. While most agreements are straightforward, some may include an escalator clause, where the rate you pay increases annually by a set percentage, typically between 1% and 3%. This allows solar providers to account for inflation and maintenance over time. That said, even with an annual increase, PPA rates are generally more stable than utility rates, which are subject to market volatility.

For many residential, commercial, and institutional property owners, a solar PPA provides a reliable path to clean energy adoption without the financial burden of owning a system outright. It combines zero or low upfront costs with long-term energy savings, minimal maintenance, and the environmental benefit of reducing reliance on fossil fuels.

If you're considering solar energy but hesitant about the upfront investment or system management, a solar PPA may be the smartest and most affordable way to power your property sustainably.