A Solar Power Purchase Agreement (PPA) is a contract where a homeowner buys the electricity generated by a solar system installed on their home, but they do not own the system. Instead, a solar company installs, owns, and maintains the system, and the homeowner agrees to pay for the power it produces at a set per-kilowatt-hour (kWh) rate.

Key Features of a Solar PPA:

1. Pay for Power, Not the Panels

   • Unlike a lease (which has a fixed monthly fee), a PPA charges the homeowner only for the electricity the system generates.

   • The rate per kWh is typically lower than the utility’s rate, leading to savings on electricity bills.

2. No Upfront Costs

   • Most PPAs require little to no upfront payment, making it an affordable way to access solar energy without buying a system.

3. Escalator Clause (Possible Price Increases)

   • Many PPAs include an escalation rate (often 1–3% per year), meaning the price per kWh increases over time.

   • It's important to check if the PPA rate will remain competitive as utility rates change.

4. No Maintenance or Repairs

   • Since the solar company owns the system, they handle all maintenance, monitoring, and repairs at no cost to the homeowner.

5. No Tax Credits or Incentives

   • The homeowner does not own the system and does not qualify for federal or state solar incentives—the solar company receives these benefits.

Key Warranty & Maintenance Protections in a PPA:

1. System Maintenance & Repairs

   • The solar company is responsible for all repairs, maintenance, and monitoring of the system for the duration of the contract.

   • If the system stops working or underperforms, the company must fix or replace parts at no cost to the homeowner.

2. Performance Guarantee

   • Most PPAs include a performance guarantee, ensuring the system produces a minimum amount of electricity each year.

   • If the system generates less power than promised, some PPAs include compensation options (e.g., bill credits or adjustments).

3. Roof Penetration Warranty

   • If the system is roof-mounted, many solar companies provide a roof penetration warranty (typically 10 years) to cover any leaks or damage caused by installation.

4. Battery Warranty (if applicable)

   • If the system includes battery storage, it is typically covered under the PPA terms, meaning the solar provider must maintain or replace it if it fails.