As the world continues to shift towards sustainable energy sources, solar is gaining immense popularity. In this evolving landscape, power purchase agreements (PPAs) have re-emerged as a game changer for solar contractors. But what are the benefits of using a PPA compared to buying a solar system outright? Let’s take a closer look.
A residential PPA is a contract between a homeowner and a solar provider where the homeowner purchases the power generated by a solar system owned by the solar provider but installed on the homeowner’s property. If the solar provider is not the company installing the system, the homeowner will sign a separate agreement with the installer. The homeowner purchases the power generated by the panels at an agreed upon rate, over a fixed term (typically 15-25 years). Because the solar provider owns the system, the homeowner can receive the benefits of clean energy while avoiding the upfront costs of purchasing and installing the panels.
One of the most significant advantages of a PPA is that a homeowner doesn't have to bear the costs of buying and installing the solar panels. This makes PPAs an appealing option for homeowners who may not be ready to make the upfront investment of purchasing a solar system.
The agreed upon rate that the homeowner pays for solar-generated power is typically lower than the rate they would pay for traditional electricity from the utility. This means that by installing solar panels under a PPA, homeowners may be able to save money on their monthly utility bills from day one.
The electricity rate is established upfront and may be for the entire term of the contract, or for the initial term with an annual payment escalator. An annual payment escalator is the percentage by which the rate will increase year over year. Knowing the rate upfront provides customers with predictable energy costs, limiting the impact of traditional electric utility rate increases and making it easier to budget.
When solar panels are bought outright, the homeowner is usually responsible for maintenance and upkeep. However, with a PPA, the solar company is responsible for the maintenance and upkeep of the solar panels. The PPA provides the homeowner with peace of mind, knowing that the solar system is being maintained at no additional cost to them.
We offer two kinds of PPAs. Each includes the option to add battery storage. Homeowners can choose between fixed monthly payments based on a pre-determined per kilowatt hour rate multiplied by the projected average monthly energy production or the fixed rate multiplied by the actual energy production. This means homeowners pay for the energy their system produces each month. Both products allow customers to lock in their energy rates, protecting them from potentially rising energy costs over several years.
Power purchase agreements have seen a remarkable resurgence in the residential solar market, offering even more options for homeowners who want to go solar. The no-cost professional installation and maintenance, potential cost savings, and environmental impact have made PPAs an attractive option for homeowners seeking to access clean energy.
It’s no secret that more homeowners are financing solar rather than paying cash upfront. Offering financing options makes solar panel installation more attainable to the average homeowner.
Every successful sale starts with getting your prospect to care about the problem you are solving. In solar, this can be tricky because most homeowners don’t stay up at night fretting about their electricity bill.