All three are ways to enjoy the benefits of solar without actually installing the solar. But all three are different in the ways in which those benefits are fulfilled.
Community solar:
Here, instead of owning and installing the solar system in your house, you invest or subscribe to a community solar project. In community solar, a large central power plant is set up by the community solar project in one place and the generated power gets shared by people who invested or subscribed to the project.
This is best for people living in a rented house as community solar has easy entry and exit compared to both PPA and lease.
The drawback here is, these projects are not available everywhere across the country. They are currently available only in specific cities like New York, California, New Jersey, etc…
Power purchase agreement (PPA):
You’re installing the solar system on your rooftop. But not by investing your own money in it but by entering into a contract with the solar company. A contract that you’re agreeing to purchase the power generated by the solar system installed for the next 20 years.
Here, you don’t own the solar system, you’re just using the power generated by the system and paying for it.
As you’re only paying for the energy you use, the cost of this varies every month. The main limitation of PPA is it is a long-term contract (20 – 25 years). And there is no exit in between the period of the contract.
Lease:
This is similar to PPA but slightly different in the way the system is used. A lease lets you install solar in your house with no upfront cost. But instead of you paying for the energy consumed, you’re paying to lease the equipment like solar panels, etc.
Think of it like leasing a car, you are using the equipment and paying for it over a period of 10, 15, or 20 years. Lease is flexible compared to PPA, where it allows you to exit the contract with a pre-notice. But the drawback is you’ve paying a fixed fee irrespective of your usage.
Both have a tiny bit more differences but this is the overall image. In PPA, your payment is variable and in the lease, it’s fixed.
To conclude,
Community solar is the installation of solar owned by a group of individuals rather than a single person. On the other hand, PPA and Lease install solar on your roof but they are owned and controlled by solar companies.
But according to experts, there are zero instances in which opting for PPA or lease is beneficial over actually buying the solar. Find out why on our blog: “Lease VS PPF, why both are bad”.
