Some FAQ’s about Solar PPA’s
What is a power purchase agreement?
This is an arrangement where a PPA company installs a solar energy system on a homeowner’s roof and the homeowner pays for the electricity generated by the system at a fixed price.
The solar PV system is not owned by the homeowner.
Which is better? PPA or a lease?
A solar PPA has the potential to save you more money over the entirety of your contract because your monthly payments are directly related to how much energy is being produced by the solar panels.
For example, in June your solar panels produced 800 kWh of solar electricity and your PPA company charged you Rs 2.35 per kWh. Your July PPA bill would be Rs 1,880.
However, in the month of December the panels produced only 600 kWh of electricity because there are less sun hours in the day. Your PPA payment would only be Rs, 1,410 as less energy is produced.
However, with a solar lease, your payment would stay the same throughout the year, no matter how much energy is being produced by the solar panels.
This way you don’t have to worry about fluctuating monthly payments, and can easily build a budget around your standard monthly payment.
Which of these options is best for the customer over the short-term? Why?
Either a lease or PPA are generally the best over the short-term because they are usually installed with zero-down and no up-front costs. However, in most cases the long-term gains of financing a system outweigh the short-term benefits of a solar lease or solar PPA.
With both solar leases and solar PPAs, you do not own the solar system on your roof. This means you are not eligible for various solar incentives, most notably the federal tax credit, which reduces the cost of installing solar by 26% until the end of 2020.
Can other financing options save me more?
When you purchase a solar energy system with cash or through a solar loan, the system will eventually be paid off.
Afterwhich, you are generating free electricity for your home without having to make monthly payments. Cash-purchased systems and those financed with solar loans will give you greater long-term savings than systems covered by solar PPAs and solar leases.