PPA vs solar lease: what is the difference?
Both mean little or nothing down. Here is how they differ and who each one suits.
The short version
With a lease, you pay a flat monthly amount to use the system. With a PPA (power purchase agreement), you pay for the electricity it produces, per kilowatt-hour. In both cases, a company owns the panels and looks after them.
What a lease looks like
Your payment is the same each month, so it is easy to budget. It does not move with how much sun you got.
What a PPA looks like
You pay for what the panels actually make, at a rate set in your contract. Sunny months cost more in solar and less on your utility bill, and the reverse in dark months.
Why people pick them
Little to nothing down. The owner handles repairs and monitoring. Your monthly cost is locked, often well below what you pay the utility now.
What to watch
Look for a rate escalator, the contract length, and what happens if you sell your home. Ask for all three in writing before you sign.
One more reason
Because the owner holds the system, the owner can claim the federal business credit and pass some of the savings on. See our post on the federal credit.
Keep reading
- Is paying cash for solar worth it in New Jersey?You own it, you keep the savings, and New Jersey stacks a few extras on top.
- Solar loans: how financing worksSwap your electric bill for a fixed payment, and own the system.
- New Jersey net metering, explainedHow your meter turns extra solar power into credit on your bill.