Using a Lease or a Power Purchase Agreement (PPA) is like switching to a clean utility with a controlled energy price for 20 years. This makes it more affordable to declare freedom from your monopolistic utility and stop paying more for your power, year and in year out.
A Lease/PPA may be a great option for property owners who:
With a lease/PPA arrangement, you, the property owner, do not own the solar power system. Instead, you lease the solar panels and other equipment placed on your roof and use the energy generated, but the system is owned by another party.
Since you do not own the solar power system on your property, you do not qualify for the 30% Residential Renewable Energy Tax Credit, which helps lower the overall cost of a system. With a solar power lease/PPA agreement, you would still pay less each month than you currently pay your utility, but this type of financing is not always the best option for homeowners looking to go solar.
At the end of your solar lease/PPA term, which is usually 20 years, you can extend the arrangement for another term, have the solar system removed from your property, or purchase the system from the owner at fair-market value.
Another potential issue with a solar lease/PPA can arise if and when you want to sell property with the lease/PPA in place. If you sell your home, the new buyer has to be approved by the lease company to take over your lease.
The chart below represents a sample of the cumulative cost of buying a 7-kilowatt Sunpower solar system with a lease/PPA compared to staying with your local power utility over a 20-year period. The savings and costs shown are samples for a typical Southern California homeowner and not necessarily representative of what you would pay or save by going solar. The pricing and savings in the chart are just estimates and should not be considered a quote of pricing from Sullivan Solar Power.
One line indicates the rising costs of utility power over the loan period, while the other line shows the cost of a solar loan. Over the 20-year loan period, you would pay $139,663 to your utility for power. Over the same time, you would pay just $48,957 to lease the equipment, amounting to a savings of more than $90,000.