Your Home Solar Options
Today, most Americans have options for going solar. It’s important to understand the choices available to you under state law and the policies of your electric utility, the differences among those options, and selecting the right one for you. The main options available today are bulleted here and explained further below:
- Purchase a solar system (with cash or a loan) and own both the system and all the power it produces
- Lease a system, usually for a monthly rate, and own all the power it produces
- Enter a “power purchase agreement” (PPA) to buy (in price per kWh) the electricity the system produces
You can purchase a solar system outright with cash or a loan. When you buy a system, you are the owner of the system and benefit from all electricity it produces. You are usually responsible for system upkeep, although most residential solar systems require no to low maintenance, and some providers offer maintenance services on purchased systems. In most jurisdictions, you also are the beneficiary of any tax credits or other incentives that promote solar energy. If you sell your home, you may include the system in the sale just like any other major home component.
In many markets, you can lease a solar system for a set time period. The solar company owns the system on your property and leases it to you. You benefit from using the electricity the system produces. The solar company is responsible for system upkeep. You make monthly payments to the solar company at the agreed upon rate specified in the lease for use of the system. Some solar companies will allow you to lease with no initial costs (“no money down”), but that does not mean the system is free. Some companies also give you an option to purchase the system after a certain amount of time. A lease is one type of third-party-owned (TPO) arrangement because the solar company (a third-party) owns the system. You have options when selling your home; make sure to ask your solar company before signing a lease.
Power Purchase Agreement (PPA)
From the consumer perspective, a PPA is very similar to a lease. Under a PPA, you pay for the actual units of electricity generated from the system, rather than leasing the system for a monthly fee regardless of how much energy it produces. In a power purchase agreement (PPA), as with a lease, the solar company owns the system on your property. Also similar to a lease, you agree to purchase the electricity produced by that system for a specified rate and agreed-upon terms specified in a contract. A PPA is also a TPO arrangement because the solar company owns the system, but some companies give you the option to purchase the system after a certain amount of time. You have options when selling your home; make sure to ask your solar company before signing a PPA.
Source: Solar Energy Industries Association. SEIA. June 2018. Residential Consumer Guide to Solar Power, www.seia.org
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