At Sunday Energy, we want everyone to have access to solar energy. However, we’ve discovered that many people hold back because they don’t understand how it works or how it will benefit them. One way our customers can trust that installing solar power will benefit them is through the solar purchase power agreement.
But what is a solar power purchase agreement? Read on, and we’ll explain this important financial incentive to install solar power.
Low Upfront Costs
A Power Purchase Agreement (PPA) is a financial contract between an energy buyer (often a business or homeowner) and an energy provider. In the context of home solar panels, a PPA allows homeowners to install solar systems on their property with little to no upfront cost. Instead of paying for the solar panels upfront, the homeowner agrees to purchase the electricity generated by the solar system at a fixed price over a set period, typically 20-25 years.
Maximum Benefits, Minimal Investment
PPAs are attractive because they provide homeowners with the benefits of solar energy, like lower electricity bills and environmental benefits, without the high initial investment. The solar company installs, maintains, and owns the solar panel system, while the homeowner simply agrees to pay for the electricity the system produces. The price is often lower than the utility’s standard rates, allowing homeowners to save money on their monthly energy costs from day one.
Remove Financial Barriers
One key advantage of a PPA is that it removes financial barriers to solar energy. Many homeowners are interested in solar but may not have the capital to pay for an installation outright. PPAs eliminate this obstacle by offering a long-term, predictable payment structure, often with a fixed rate that’s lower than conventional utility rates.
Possible Drawbacks
However, while homeowners benefit from lower energy costs, they do not own the solar system, which means they don’t receive the federal or state tax incentives, such as the solar investment tax credit (ITC). Additionally, once the PPA term ends, homeowners may have to pay to purchase the system, renew the agreement, or have the panels removed.
Install Solar with a Power Purchase Agreement
Overall, a Power Purchase Agreement provides a practical way for homeowners to embrace solar energy without the upfront costs, while still benefiting from cleaner, renewable energy and reduced electricity bills. Contact our team at Sunday Energy to learn more and to start the solar installation process.