Power Purchase Agreement | What is a Power Purchase Agreement?

The cost of electricity through solar is lower than the cost of purchasing electricity from the utility company. However not everyone can afford the upfront cost of solar. In case of a Power Purchase Agreement, a third party owns the solar electrical system. The client purchases its electricity from the third party, instead of the utility company.

How is a Power Purchase Agreement Structured?

We work with the customer in securing a third-party investor group who pays for the costs of installing and operating the system. The third-party investor also receives all solar incentives normally taken by the host customer. The Power Purchase Agreement group and customer negotiate a cost per kilowatt-hour which the customer pays over the term of a contract, usually 15 or 20 years. During this period the Power Purchase Agreement investor group makes its return on investment while the customer need only pay for what the solar system produces.

Who can use a Power Purchase Agreement?

Everyone is entitled to use Power Purchase Agreement to finance their solar electrical system. This includes non-profit organizations that cannot take advantage of tax credits and government grants. However, Power Purchase Agreement model for solar allows non-profits to purchase energy from third-parties.