When searching for ways to finance solar panels, many installers will advertise solar power purchasing agreements (PPAs) as an easy and low maintenance option. Solar PPAs are fantastic for reducing your electricity bills and providing ease of mind when it comes to fulfilling your energy needs.
Get to know PPAs
When you sign up for a power purchase agreement, you are essentially renting your solar panel system from a third party. Unlike a lease where you are paying directly for the use of the system, you agree to purchase the power generated by the system at a set price per kilowatt-hour, usually lower than the local utility’s rate.
Typically, a lease with the lifespan of around 10-25 years outlines the terms and conditions of the agreement. Here, the solar leasing company owns and maintains the system, entitling them to the tax breaks and financial benefits associated with installing solar.
Other items to consider when thinking about signing a PPA include:
- Monitoring of your system’s performance, typically offered through online platforms and accessible through your smartphone or tablet.
- Purchasing the system may be an option available to you at any given moment, normally at a price point outlined within the terms of your agreement.
- If you plan on moving or selling your property, you can transfer the remainder of the lease to the buyer or purchase the system from the leasing company and include it within the sale of the property.
Ownership vs. Leasing
As attractive of a deal as solar PPAs may sound, those looking to reap the benefits of solar as fast as possible may consider purchasing their panels outright as a much more enticing offer. Here, you’re able cash in on the many tax incentives offered at the state and federal level. When it’s all said and done, you become the sole owner of the solar panel system, providing you with the opportunity to potentially eliminate your energy bill and increase the value of your property.
If you have any questions regarding the financing process of your solar panel installation, speak with your solar rep, and they should be able to assist you throughout the process.
Download our eBook, How to Finance Your Solar, to learn more about the financing options available to you before kicking-off your next home improvement project!