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  • Writer's pictureRon Magby

Understanding PPAs and Solar Leases for Third-Party Solar Ownership

As the world embraces sustainable energy solutions, the solar industry has witnessed a surge in third-party ownership (TPO) options, particularly through solar leases and power purchase agreements (PPAs).   Let’s review these two popular choices and shed light on how 2sunssolar, a leading solar brokerage company, can assist homeowners in making the right decisions.

 

According to Wood Mackenzie, a prominent renewable energy industry research firm, the TPO segment is experiencing its fastest growth since 2014. Projections for 2023 indicate a remarkable 23% growth rate for TPO, with customer ownership lagging behind at just 4%. Various factors, including high-interest rates and market conditions, contribute to this shift, making solar leases and PPAs increasingly attractive to homeowners.

 

Solar Leases: Predictable and Affordable

Solar leases involve a provider installing and maintaining solar panels on a property, charging a fixed monthly fee for electricity usage.

Key benefits of solar leases include:

 

  • Predictable Costs: Homeowners pay a fixed monthly payment for the duration of the lease, regardless of how much energy they consume

  • Affordable Access: Most providers offer leases with low or no upfront costs

  • Maintenance Included: The solar provider handles any potential maintenance

  • Lower Energy Bills: Generate your own power and reduce utility bills

  • Flexible Terms: Choose lease duration and potentially buyout options at the end As with a PPA, a solar lease gives limited control over the maintenance, repairs, and operation of the solar panels. Utility savings may not be as significant as owning a solar system outright, and you may encounter exit costs or rate increases over time.

 

Power Purchase Agreements (PPAs): Tailored to Consumption

In a PPA, a solar provider owns, operates, and maintains solar panels on a property, and homeowners pay a monthly rate based on energy consumption. PPAs offer benefits such as usage-based costs, no upfront expenses, low energy rates, covered maintenance, limited risk through performance guarantees, and flexible options. However, homeowners should consider limitations on system control, potential fees for exiting before the contract ends, and implications for home sales.

 

  • Usage-based Costs: Homeowners pay a monthly rate that’s based on energy consumed (per kilowatt hour)

  • No Upfront Cost: Most providers allow you to start using solar energy without initial expenses

  • Low Energy Rates: PPAs allow you to lock into electricity rates that are lower than the utility

  • Maintenance is Covered: The solar provider handles potential maintenance for the duration of the PPA contract

  • Limited Risk: PPA providers guarantee that your system will produce within a certain range of kilowatt-hours (kWh) of electric energy, ensuring you get the benefits of solar even if your panels are underperforming

  • Flexible Options: Choose contract terms that suit your needs, including contract length and buyout options

 

2sunssolar: Your Solar Decision Partner

Choosing between a solar lease and a PPA and Understanding PPAs and Solar Leases can be complex, as every state, utility, and household has unique variables influencing the value proposition. To help homeowners make informed decisions, 2sunssolar offers expert guidance. Their solar specialists can provide insights into available options in specific areas, aligning choices with individual goals, and ensuring the best fit for each client.

 

Finding Your Perfect Fit:

While both solar leases and PPAs reduce upfront costs and maintenance responsibilities, the choice between them depends on individual preferences and circumstances. Solar leases, with their predictable payment plans and customization options, are especially appealing. However, homeowners with significant tax liabilities might find traditional loans more advantageous, allowing them to benefit from the full 30% solar tax credit, which is not available with leases and PPAs.

 

Embracing solar energy through TPO options is an accessible and sustainable choice for homeowners. Whether opting for a solar lease or a PPA, understanding the nuances of each is crucial. With the guidance of 2sunssolar's solar specialists, homeowners can confidently navigate the solar landscape, making informed choices that align with their goals and preferences. The future of solar ownership is bright, and with the right knowledge and support, homeowners can contribute to a cleaner, greener planet.


Understanding PPAs and Solar Leases

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