Path-Q Solar
How should I compare a solar PPA with buying the system outright?
Answer
Compare the PPA's price per generated unit, escalation, contract term, expected production, and transfer obligations with the upfront cost and ownership cash flows of buying. A PPA generally avoids upfront equipment ownership but gives the provider control of the system and leaves the customer paying for contracted energy.
Key points
- Model payments using expected production, not only a first-year estimate.
- Compare the PPA's total and present-value payments with ownership costs and bill savings.
- Review production guarantees, maintenance, insurance, roof work, buyout, and property-sale terms.
What it depends on
- PPA rate, escalation, term, and payment rules
- Expected production and degradation
- Ownership purchase price and financing
- Transfer, buyout, maintenance, and contract obligations
Risks and trade-offs
- Escalation may make later PPA energy more expensive than expected.
- Selling the property can be complicated by transfer or buyout requirements.
- Ownership has more upfront responsibility but may provide greater long-term value and control.
Information you may need
- Complete PPA agreement and payment schedule
- Production guarantee and degradation assumptions
- Comparable cash or financed purchase quote
- Current bill structure and export treatment
Your next step
What to do next
Have the PPA provider and an ownership quote provide comparable cash-flow schedules over the actual proposed contract term, including sale, buyout, maintenance, and export assumptions.
Path-Q
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Some details may depend on your location, installer, utility, incentives, regulations, or specific property.
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