Solar leases and Power-Purchase Agreements (PPAs) are basically ways to get solar power for your home without having to buy the panels themselves. A company installs solar panels on your home’s roof, and then either leases you the panels (for a set monthly cost) or sells the electricity to you (for a set price per kilowatt-hour). Collectively known as “third-party ownership,” solar leases and PPAs can be a great way to start generating your own clean energy without spending thousands of dollars up front!
If you live in a green state, congratulations! $0-down solar is likely available in your neighborhood. Click on your state to go to your a special page with information about the policy and incentives that make it so great, or just connect to a solar expert in your area to learn more!
The reason these states are so good for third-party ownership is the great policy and incentives they’ve put in place to make sure solar is a good investment. And that means getting a lease or PPA isn’t always the best way to go solar. You can save even more if you pay cash or get a low-interest solar loan. Skip the middle man and become a solar owner!
Like we said above, the best states have laws like Renewable Portfolio Standards and Net Metering to encourage rooftop solar and make sure you get full credit for the energy your panels produce. Many of the grey states above are missing one or both of these laws, which makes the economics of solar a little more difficult for third-party owners.
Even in these states, you might still find some good financial incentives to help you take thousands off the cost. And you can still pay cash for a solar panel system, or in many cases get a low-interest loan that pays itself back over time with the electricity savings. Click your state to find out more, or connect with a solar expert in your area to see what options are available to you.
Is your state red? Ouch. Some states—even Florida, the SUNSHINE STATE—have laws that prohibit third-party ownership of solar systems. This usually means homeowners have to finance the cost of solar themselves, although there are often great $0-down loan options available. Solar loans are offered by many of the biggest installers and banks all over the country, so click your state, read about the options you have, and get excited about saving money with solar!
So here’s how it works: you agree to a 20- or 25-year lease with a solar installation company, you get panels on your home with no money down, then you pay the company a monthly lease payment that is less than your monthly electric bill savings. That’s huge! Lease customers around the country save an average of about $35 per month on their energy bills with a solar lease. Here’s how the numbers break down:
With a lease:
If your average monthly bill is about $160 before you get solar panels on your house, a typical 5-kW solar system might save you about half, depending on where in the country you live. The lease payments on that system will be about $45, which means your overall savings are still about $35 per month! Over 25 years, considering the way electric companies typically raise rates, you’ll save almost $19,000 on electricity costs. That’s HUGE!
With a PPA:
PPA Prices tend to start out significantly lower than the retail cost of electricity. Your installer will work with you to design a system that can meet your needs. If you can replace all the electricity you use with solar, you’re looking at a savings of about $35-$40 per month, just like a lease.
Unlike a lease, the cost of a PPA usually rises by about 2-3% per year, to keep pace with the cost of retail electricity. This is where you’ve got to be careful. Although retail prices have traditionally risen by about 3.5% per year, try to get a PPA with a lower annual increase.
Now you’re smart about solar leases and PPAs. Go out and tell the world!