Power Purchase Agreement (Residential PPA)
A contract where a third party owns the solar system on your roof and you purchase the electricity it produces at a set rate — typically lower than the utility rate, with annual escalators.
Why It Matters
PPAs require zero upfront cost, but you don't own the system or the tax credits. Savings are smaller than ownership. Escalator rate (1-3%/year) means your PPA rate might approach utility rates over time.
Related Terms
Solar Lease
A financing option where you pay a fixed monthly fee to rent a solar system, while a third party owns and maintains it.
Solar Loan
A financing product specifically designed for solar installations, typically offering 10-25 year terms. May be secured (using home equity) or unsecured, with rates from 3-9%.
Federal Tax Credit (ITC)
Investment Tax Credit allowing homeowners to deduct a percentage of solar installation costs from federal taxes. Currently 30% through 2032.