Unveiling the World of Third-Party Solar Ownership

As the solar energy revolution gains momentum, third-party ownership (TPO) options like solar leases and power purchase agreements (PPAs) are emerging as popular choices for homeowners. Wood Mackenzie, a leading renewable energy industry research firm, reports that the TPO segment is experiencing its fastest growth since 2014, with a projected 23% increase in 2023. In this blog, we'll delve into the realm of TPO, focusing on solar leases and PPAs, exploring how they function, their distinctions, and the advantages and disadvantages of each.

Please note that the solar landscape is diverse, with variations in state policies, utility regulations, and individual household requirements. This blog provides a general overview, and for personalized advice, it's recommended to consult with our solar specialists who can guide you through the options available in your area.

Understanding Solar Leases

With a solar lease, a provider installs and maintains solar panels on your property, offering you the benefit of generated electricity for a flat monthly fee. This fixed-rate remains consistent, irrespective of your monthly energy consumption. The lease provider leverages federal tax credits to reduce overall lease costs and monthly payments, making solar more accessible for homeowners. Key advantages of solar leases include predictable costs, affordable access with low or no upfront expenses, maintenance included, lower energy bills, and flexible terms. However, limitations include reduced control over system operations and potential exit costs or rate increases over time.

Exploring Power Purchase Agreements (PPAs)

In a power purchase agreement (PPA), a solar provider owns, operates, and maintains solar panels on your property. Monthly payments are based on energy consumption, offering flexibility as they vary with usage. While you don't directly claim federal tax credits with a PPA, the provider does so and uses the credit to lower your electricity pricing. PPAs provide benefits such as usage-based costs, no upfront expenses, low energy rates, covered maintenance, limited risk with guaranteed system performance, and flexible contract options. Drawbacks include limited control over the solar panels, potential restrictions on system modifications, exit fees, and considerations when selling the property.

Finding the Right Fit

Both solar leases and PPAs present homeowners with the opportunity to enjoy solar benefits without significant upfront costs or maintenance responsibilities. These options often include performance guarantees, making clean, sustainable energy accessible. Solar leases, with their predictable monthly payments and customization options, are particularly attractive. However, homeowners with substantial tax liability may find traditional loans more advantageous, as they allow full access to the 30% solar tax credit, unavailable with PPAs and leases. Regional variations also play a role, emphasizing the importance of consulting with a specialist to explore options tailored to your location.

Ready to Explore Solar Financing Options?

Discover potential savings by clicking the "Get a Quote" button at the top of this page. Our local solar experts can provide a no-obligation, fully-customized quote, guiding you toward the most suitable solar ownership option for your needs.

Sources: https://www.woodmac.com/news/opinion/us-residential-solar-finance/#:~:text=For%20the%20first%20time%20since,grow%20by%204%25%20in%202023 / https://blog.powur.com/the-benefits-of-third-party-solar-ownership-solar-ppas-vs-solar-leases/?sname=eric.williamsjr

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