Solar leases and PPAs are very similar, but with a solar lease, you will pay a fixed amount of money per month, while with a PPA, you'll pay per kilowatt-hour. Here's what you should know about both. Find out what solar panels cost in your area in 2024 Contact online >>
Solar leases and PPAs are very similar, but with a solar lease, you will pay a fixed amount of money per month, while with a PPA, you''ll pay per kilowatt-hour. Here''s what you should know about both. Find out what solar panels cost in your area in 2024
A solar lease and a solar power purchase agreement are both ways to get solar panels on your property without up-front payment. The difference is in the monthly payment.
Like a lease, a solar power purchase agreement enables energy savings without requiring system ownership. While monthly lease payments are fixed, in a PPA, you pay for the amount of solar energy produced.
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Many solar installers advertise solar leases or power purchase agreements (PPAs) as an easy way to reduce your electricity bill. And they''re not wrong; if you''re interested in a simple, low-maintenance way to install a solar panel system for your home, leasing solar panels can be a good option.
But you''ll save a lot less over time with these types of third-party ownership financing arrangements compared to a solar loan or paying upfront. Solar leases and PPAs are very similar, but with a solar lease, you will pay a fixed amount of money per month, while with a PPA, you''ll pay per kilowatt-hour.
During this time, you pay the solar leasing company for the benefits of the solar panel system (i.e., the solar electricity powering your home). However, because the solar leasing company owns the equipment, they are responsible for maintenance. They are also entitled to all the rebates, tax breaks, and performance-based incentives available for solar in your area.
For a while, renting a solar panel system with a short-term contract was possible through Tesla''s subscription model, launched in 2019. For a set monthly fee, Tesla would install and maintain the system and remove the panels if you decided solar wasn''t for you. However, Tesla discontinued this program in 2021.
With a solar lease, you agree to pay a fixed monthly lease (e.g., $150 a month). Your leasing company determines this amount based on the estimated annual production of your solar panel system.
However, with a solar PPA, you agree to purchase the power generated by the system at a set price per kilowatt-hour (kWh) (e.g., $0.15 per kWh) instead of paying a fixed monthly amount. Because solar panels typically produce more electricity during the summer than during the winter, most people with a PPA have higher solar bills in the summer (and more bill savings) during the summer months.
Between the two, savings are typically the same over the year. In other words, if you average out solar PPA payments over a year, that would equate to a monthly solar lease payment.
Here''s how this might play out for a 7 kilowatt (kW) solar panel system in a state like Massachusetts over 12 months. Let''s assume the system covers 100% of the household''s electricity usage.
With both options–a monthly lease payment of $96.60 or a PPA rate of $0.15 per kWh–you''d pay about the same over 12 months, generate the same amount of solar electricity, and save the same amount on your utility bills.
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