Solar Power Purchase Agreement (PPA)
A solar financing option that allows you to use solar energy without owning the system.
What Is a Solar Power Purchase Agreement?
A Solar Power Purchase Agreement, commonly called a PPA, is a solar financing option where a third-party solar provider installs, owns, and maintains a solar energy system on your property. Instead of purchasing the equipment, you agree to buy the electricity the system produces at a predetermined rate.
With a PPA, the system is designed to offset a portion of your electricity usage, helping reduce reliance on utility power. The solar provider remains responsible for system ownership and operation throughout the agreement term.
How a Solar PPA Works
Under a solar PPA, the solar provider installs a system tailored to your property and energy usage. The electricity generated by the system is used on-site, and you pay only for the power produced, typically measured per kilowatt-hour.
Property and energy evaluation
System design and installation
Solar system produces electricity
Customer purchases generated power
Standard PPA vs Prepaid PPA
Standard Solar PPA
A standard PPA typically involves little to no upfront cost.
The customer pays for the electricity produced on a monthly
basis over the agreement term.
Prepaid Solar PPA
A prepaid PPA involves an upfront payment that covers a significant portion of the electricity the system is expected to produce over time. This option can reduce long-term electricity costs compared to monthly payments.
System Ownership and Maintenance
With a solar PPA, the solar provider owns the system and is responsible for maintenance and performance monitoring. This structure allows customers to use solar energy without managing equipment ownership or ongoing system upkeep.
Because the provider owns the system, tax incentives and depreciation benefits typically apply to the system owner rather than the customer.
Solar Incentives and Financial Considerations
Solar PPAs are structured so that available incentives and tax credits are applied by the system owner. These incentives can help support competitive electricity pricing within the agreement.
Eligibility for incentives and program availability varies based on location, system size, and current regulations.
Is a Solar PPA Right for You?
A solar PPA may be a good fit for property owners who prefer lower upfront costs, want predictable energy pricing, or do not wish to manage system ownership. Evaluating energy goals, property conditions, and long-term plans helps determine whether a PPA aligns with your needs.
Why Consider SunSent Solar
➼ Education-first solar consultations
➼ Clear explanation of financing options
➼ In-house installation team (no subcontractors)
➼ Solar and roofing coordination
➼ Midwest-focused solar expertise
f.a.q.
About Solar Power Purchase Agreements
PPA stands for Power Purchase Agreement, a contract where you purchase electricity generated by a solar system owned by a third party.
No. Under a PPA, the solar provider owns and maintains the system during the agreement term.
A standard PPA uses monthly electricity payments, while a prepaid PPA involves an upfront payment that covers future power production.
Maintenance and system monitoring are typically handled by the system owner.
Many PPAs allow transfer to a new owner, subject to qualification and agreement terms.
Solar PPAs commonly run for 20 to 25 years, depending on the agreement.