Path-Q Solar
How can I compare a solar lease with a power purchase agreement?
Answer
Compare the two contracts on total expected payments, escalation, ownership, performance risk, and exit obligations. In a lease, payment is generally tied to use of the equipment; in a power purchase agreement, payment is generally tied to measured or defined energy production. The exact distinction and protections depend on the contract.
Key points
- Compare the starting payment, escalation formula, term, minimum charges, and estimated total payments.
- Identify who owns the system and receives incentives or other ownership benefits.
- Check how production is measured, what happens during outages, and whether underperformance changes the payment.
- Review sale, transfer, buyout, early termination, roof repair, insurance, and removal provisions.
What it depends on
- Definitions of lease payments or energy charges in each contract
- Production and billing methodology
- Escalation and end-of-term terms
- Responsibilities for maintenance, damage, insurance, and roof work
Risks and trade-offs
- A lower starting payment may not produce the lowest lifetime cost.
- A PPA can expose the customer to production-related billing complexity; a lease may leave the customer paying regardless of actual output.
- Both arrangements can complicate sale or refinancing if transfer terms are restrictive.
Information you may need
- Full lease and PPA proposals with all schedules
- Estimated production and utility-bill savings under each option
- Buyout, transfer, termination, and roof-work terms
- Expected time in the property
Your next step
What to do next
Create a contract comparison table showing payments, escalation, responsibilities, and exit costs over the period you expect to own the property.
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Some details may depend on your location, installer, utility, incentives, regulations, or specific property.
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