A solar power purchase agreement (PPA) is a financial agreement where a developer arranges for the design, permitting, financing and installation of a solar energy system on a customer's property at little to no cost.
While the terms “solar lease” and “solar PPA” are used interchangeably on this page, and are very similar in practice, there is a key difference between the two. With a solar lease, you agree to pay a fixed monthly “rent” or lease payment, which is calculated using the estimated amount of electricity the system will produce, in exchange for the right to use the solar energy system. With a solar PPA, instead of paying to “rent” the solar panel system, you agree to purchase the power generated by the system at a set per-kWh price.
Purchasing a solar panel system with cash, or financing a purchase with a solar loan, is your best option when you…
Want to maximize the financial benefits of installing a solar panel system, rather than solely benefitting from the system’s environmental benefits;
Are eligible to reduce your federal and state tax liability through the federal investment tax credit;
Are a business, and can realize tax benefits by treating the solar panel system as a depreciable asset; and/or
Want to increase the market value of your home by installing a solar panel system.