Power Purchase Agreement

A Power Purchase Agreement (PPA) is a financial arrangement in which a third-party developer owns, operates, and maintains the photovoltaic system, and a host customer agrees to site the system on its property and purchases the system's electric output from the solar services provider for a predetermined period.

How does a PPA agreement work?

If your organization is a non-tax paying entity, then a PPA is a great fit because the third-party developer can claim the solar tax credit on your behalf.
The developer arranges the design, permitting, financing, installation, and ongoing maintenance of the system. This occurs on the host site at little to no cost.
As a result, the host customer can yield a reduction in electricity supply charges Day 1 with minimal risk.
PPA agreements typically range from 5-25 Years. At the end of the contract term, the host customer may extend the PPA, buy the system, or have it removed.

Solar Panels Overhead on Commercial Building

The Benefits

No or low upfront costs: Without any upfront investment, the host customer is able to adopt solar and begin saving money as soon as the system becomes operational
Reduced energy costs: Solar PPA’s provide a fixed, predictable cost of electricity for the duration of the agreement.
Limited risk: The developer is responsible for system maintenance, performance, and operating risk.
Ability to indirectly leverage tax credits: The developer is typically better positioned to utilize available tax credits.
Educational: PPA systems can often be found on schools, churches, and municipal buildings.

Power Purchase Agreement

Solar

Services

Company

Resources