{"id":2563,"date":"2022-10-17T08:55:29","date_gmt":"2022-10-17T08:55:29","guid":{"rendered":"https:\/\/ledask.com\/?p=2563"},"modified":"2022-10-18T08:29:54","modified_gmt":"2022-10-18T08:29:54","slug":"solar-lease-vs-ppa","status":"publish","type":"post","link":"https:\/\/ledask.com\/solar-lease-vs-ppa\/","title":{"rendered":"Solar Lease vs. PPA: A Comparison Between Long-Term Solar Financing Options"},"content":{"rendered":"\n
If you are a home or business owner who has decided to go green and invest in solar, you’re heading in the right direction. But making that decision is the easy part. Solar is not cheap. You will have to pay a significant sum to harness the sun’s power. But there is a workaround. Solar lease vs. PPA (power purchase agreements) can get you solar energy without investing a big chunk of your money. In this article, we will compare solar lease vs. PPA to show you the options each agreement gives you. Take a look!<\/p>\n\n\n
Also referred to as a solar service agreement, a solar lease<\/a> allows customers to bypass the upfront costs of buying and installing solar panels. Instead, the customers make monthly lease payments to power their homes using solar energy.<\/p>\n\n\n\n The lease agreement gives the solar company ownership of the solar panels. But you can use all the electricity generated from the solar panels on your roof.<\/p>\n\n\n\n Solar panels on a tiled roof<\/em><\/p>\n\n\n\n Leases take anywhere from 10-25 years, and you pay a fixed amount each month regardless of the power generated by the solar system.<\/p>\n\n\n\n The solar lease payments are usually less than what you pay as the average electric utility bill monthly. Therefore, you should start saving from day one.<\/p>\n\n\n\n When the lease expires, you have the following options.<\/p>\n\n\n\n A solar PPA (Power Purchase Agreement<\/a>) is another way of investing in solar energy without paying for the panels upfront. But in this agreement, you don’t pay fixed monthly payments.<\/p>\n\n\n\n Solar panels being installed on a roof<\/em><\/p>\n\n\n\n Instead, the solar installer charges the monthly costs based on the power the solar panels generate to run your home. The solar company usually offers a fixed rate for every kWh (kilowatt-hour<\/a>) the panels produce, which is cheaper than what you get from the utility company.<\/p>\n\n\n Solar PPA and lease contracts have several similarities, which include the following.<\/p>\n\n\n You do not pay for the solar panels or installation costs in either of the contracts. The solar company takes care of these costs. However, they maintain ownership of the products.<\/p>\n\n\n The solar installer is also responsible for maintaining, repairing, and monitoring the system over the contract period.<\/p>\n\n\n\n A maintenance engineer inspecting a solar panel<\/em><\/p>\n\n\n Nothing comes for free. Instead of paying purchase and installation costs, you make monthly payments to the solar company for the service given by the solar panels. These payments are usually lower than the cost of utility company electricity.<\/p>\n\n\n Solar lease terms and PPAs are long-term contracts that allow the solar installer to recover the investment slowly over time. Lease companies can give shorter terms ranging from 10-25 years. However, PPA contracts can last anywhere from 20-25 years.<\/p>\n\n\n\n You can renew the contract, purchase the solar panels, or let the solar company take their solar panels when the time lapses. Also, you can buy the system during the lease or PPA period at the market price or a price defined in the contract (whichever is higher).<\/p>\n\n\n\n Solar panels on a roof on a sunny day<\/em><\/p>\n\n\n The monthly payments for PPA or solar lease agreements increase annually. The agreement usually defines this increase, which can be between 3% and 5%. Therefore, a long-term contract might be expensive during the final years.<\/p>\n\n\n If you want to sell your home, it is possible to transfer the solar financing agreement to the new owner. However, these agreement conditions will make it harder to sell the property because not everyone will find economic sense in the solar financing model.<\/p>\n\n\n A solar lease gives you an equipment rental and performance agreement. Therefore, you will pay a flat fee monthly until the contract expires. These payments are usually lower than utility bills. But the actual lease payments depend on several factors, such as the following.<\/p>\n\n\n\n On the other hand, a solar power purchase agreement is an energy contract that operates more like your utility bill. In this contract, the homeowner pays for the kWh the solar energy system produces. So the monthly payments will vary, and you will pay more during the hot summer months when the panels generate more power.<\/p>\n\n\n\n However, the solar electric rates are usually lower than the utility company<\/a> rates per kWh. But the actual energy rates will depend on the following.<\/p>\n\n\n\nPros and Cons of a Solar Lease<\/h3>\n\n
Pros<\/h4>\n\n\n
Cons<\/h4>\n\n\n
What is a Solar PPA?<\/h2>\n\n\n
Pros and Cons of a Solar PPA<\/h3>\n\n
Pros<\/h4>\n\n\n
Cons<\/h4>\n\n\n
Features of Solar Leases and PPAs<\/h2>\n\n\n
Zero Upfront Costs<\/h3>\n\n\n
No Maintenance or Repair Costs<\/h3>\n\n\n
Monthly Payments<\/h3>\n\n\n
Long-Term Solar Contracts<\/h3>\n\n\n
Price Escalation<\/h3>\n\n\n
Uncertainty When Selling Your Home<\/h3>\n\n\n
Solar Lease vs. PPA: Differences Between a Solar Lease and PPA<\/h2>\n\n\n