Solar leases and power purchase agreements (PPAs)

Solar leases and power purchase agreements (PPAs) are two types of financing arrangements that allow homeowners, businesses, and other organizations to install solar panels on their property and generate electricity from the sun.

A solar lease is a financing arrangement in which a homeowner or business agrees to pay a third party for the use of solar panels installed on their property. The third party, usually a solar energy company, owns, maintains, and operates the panels, and the homeowner or business agrees to pay a fixed monthly fee for the electricity generated by the panels. Solar leases typically have a fixed term, after which the homeowner or business has the option to purchase the panels or have them removed.

A power purchase agreement (PPA) is a financing arrangement in which a homeowner or business agrees to purchase electricity generated by solar panels installed on their property from a third party. The third party, usually a solar energy company, owns, maintains, and operates the panels, and the homeowner or business agrees to purchase the electricity at a fixed rate. PPAs also typically have a fixed term, after which the homeowner or business has the option to purchase the panels or have them removed.

Both solar leases and PPAs can be attractive options for homeowners and businesses who want to generate their own electricity from the sun but do not want to pay the upfront cost of purchasing and installing solar panels. They can also be a good option for organizations that want to reduce their carbon footprint and adopt renewable energy but do not have the capital or expertise to install and maintain solar panels on their own.