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.
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.





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