ALL ABOUT
HOW SOLAR PPA WORKS

Are you planning to go green with your energy consumption? Here is an easy way to do so with the help of a solar PPA. Let’s discuss PPAs and delegate your solar financing issue to an expert developer.

What is a Solar PPA?

Solar PPA is an abbreviation for “Solar Power Agreement.” It’s a financial agreement under which the developer is liable to arrange the design, legal permit from authorities, financing, and installation of the solar energy system on the customer’s property at a minimal cost. Now that the solar energy plant is set up, the developer sells the generated energy to the host consumer at a fixed rate that benefits the consumer in the following ways:

• The energy used by the consumer is at a lower price than the local utility’s retail rate.
• This offsets the customer’s purchase of energy from the grid.

The PPA benefits the developer in the following ways:

• The developer receives income from selling electricity to the consumers.
• He benefits from the tax credits.
• Various other incentives are also generated from the solar system.

The solar PPA lasts from 10 to 25 years, and the developer is responsible for the maintenance and operation of the energy system during all these years. As the PPA contract ends, the parties can extend it or the consumer can ask the developer to remove it. The consumer can also offer to buy the solar energy system from the developer itself.

All About the Functioning of the Solar PPA

A customer can enter into a PPA with the PPA developer for a period of 5 to 25 years. After the developer has installed the solar energy system on the roof of the customer’s home, it will ensure to cover the electricity usage of the consumer’s home.

The solar plant is installed by the developer for the excess energy. If there is any excess energy produced that is not used by the home, then it is sent to the utility grid. The incentive earned by the extra energy is for the developer to grab, as he is the owner of the solar energy plant.

However, let’s keep it clear that signing a PPA doesn’t mean you won’t get any electricity bills. As the developer owns the energy plant, you will get your usual monthly electricity bill for solar energy. Most of the PPAs also have a price escalation clause. A price escalator means the price of solar energy will increase annually.

When your PPA expires, you will have the option of renewing it or having the system removed.

Did You Know?

The PPA allows consumers to take advantage of net metering benefits. It is a utility program that allows your electric company to purchase the excess solar energy from your solar panels at the full retail rate of electricity

Savings from a Solar PPA

The amount of money you will pay for electricity after signing a PPA varies according to a few variables:

• The amount of energy consumed by you
• The utility cost of your energy
• The cost of energy that you have agreed to pay in the PPA

Pros of a Solar PPA

• There is no upfront cost for installation needed, as it’s all the developer’s job.
• Consumers save good money on electricity bills and take advantage of net metering benefits.
• No responsibility for solar energy plant maintenance or monitoring exists.

Points to Keep in Mind Before Choosing a Solar PPA

Incentives

One must consider the fact that if you sign up for a PPA, you will not be able to derive the benefits of incentives. Hence, if this is not an issue, you can choose a PPA over owning your own solar energy system.

PPA Terms

Make sure you read the terms of the PPA thoroughly. PPA is a long-term agreement, and you wouldn’t want your developer to make you sign some arbitrary agreement.

Other Options

Before you get into a PPA, check out your financing options to own your own solar energy system. Check your solar rebates, solar loans, and lease options.

Conclusion

A solar PPA can completely transform your life. Saving money on electricity bills without the hassle of owning or maintaining a solar energy system sounds like a dream come true. It’s simple to go green with a solar PPA.

Key Takeaways

• Consumers can go sustainable with their energy consumption the easy way with a PPA.
• A PPA allows you to use solar energy and pay monthly bills as usual, but at a reduced cost.
• There are various benefits that consumers and developers reap mutually from PPA. Read the blog to learn all about PPA and see if this option of choosing sustainable energy is suitable for you or not.