Both solar lease and PPF are policies to help solar adapters who are tight on budget. They both allow you to purchase and install the solar system on your roof at no upfront cost. In both cases, you don’t own the solar in the end. So on the surface level, they look the same. But the difference lies in the way of payment. One is fixed and the other varies every month.
Power Purchase Agreement (PPA)
You’re entering a contract with a solar company. A contract that you’re agreeing to purchase the power from the company for the next 20 years. You don’t own the solar system. Instead, 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. These are long-term contracts (20 – 25 years). And there is no exit in between the period of the contract.
Lease
Now similar to PPA, a lease also 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’re paying a fixed fee irrespective of your usage.
Both have a bit more differences but this is the overall image. In PPA, your payment is variable and in the lease, it’s fixed. So now coming to the argument of
Why both are bad
You see, when it comes to solar, almost all economic class people buy it by taking a loan. And the main argument for solar is you own your power. In loans, when the payback period is over, you own the power. But if you choose PPA (or lease) over purchasing the system, you never get to own your power. You have to pay every month similar to what you’re already doing with regular utility companies. Also, there are other hidden disadvantages to opting for a PPA like
- Leaks: The problem arises when you have leaks, or you’re planning to change your roof. Because you signed the agreement, only that company can uninstall and reinstall the system. And if you do it without them, you will be sued for it for violating the terms. There are many cases where customers are facing leaks on their roofs but not getting any response from the solar company. In that case, they are stuck with the situation. They have to wait for the solar company to uninstall them to change their roofs.
- You have to always pay: As I said the main argument for going solar is not having to pay anymore. With PPA, you’re just paying the solar company instead of the regular utility company.
- Escalator rates: When you purchase the system, the payments are fixed. But when you sign PPA, you’re agreeing to an escalator rate. Meaning: The prices will rise every year. And it becomes a pain in the neck.
- No tax incentive: When you lease the system, you’re not eligible to enjoy the Federal tax credit. Instead, the company which owns the panel enjoys the 30% tax incentive.
So when you consider all these, there are zero incidences in which going for PPA or lease is beneficial compared to actually buying the system. So if you’re planning to go solar, the best way is to buy the system. Never fall for PPA or lease, because you never get to own either the system or the power.
