PPA

A solar power purchase agreement (PPA) is a financial agreement where a developer arranges for the design, permitting, financing, and installing the solar energy system on a customer’s property with a little cost. The developer sells the power generated to the host customer at a fixed rate that is typically lower than the local utility’s retail rate. This lower electricity price serves to offset the customer’s purchase of electricity from the grid while the developer receives the income from these sales of electricity as well as any tax credits and other incentives generated from the system. PPAs typically range from 10 to 25 years and the developer remains responsible for the operation and maintenance of the system through the duration of the agreement. At the end of the PPA contract term, a customer may be able to extend the PPA if the developer removes the system or chooses to buy the solar energy system from the developer.

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Benfits

Limited risk

No upfront capital costs

Reduce energy cost

Potential increase in property value

Better leverage of available tax credits