Should You Sign up for a Solar Power Purchase Agreements for Your Home?

If you are looking to venture into the wonderful world of solar PV, you have some options before making the commitment:

  • You can purchase your solar system outright and own the panels. This would mean you reap the tax benefits, incentives, and not to mention your bill would be significantly lower through the added generation source.
  • Or, if your market is competitive like Texas, you have the option to sign a PPA with a utility or third-party provider. This provider will cover installation and maintenance, but they will also get all tax credits and financial incentives you otherwise would have gotten had you done it independently. 
  • Instead of having the solar power sources directly at home, you can always purchase renewable electricity plans, especially if you are on the fence about solar for now. Just make sure you are in a region where you can bank on reliable wind, solar, or geothermal generation. 

With that being said, if we are talking solely about either signing a Power Purchase Agreements or buying the solar panels yourself, the upfront cost is something to consider.

If You Are Wanting to Own the Solar Panels: Price Considerations

 If you want to own a solar PV system, you are looking at a long term investment that can lead to a return on investment far greater than the price paid – this comes in in the form of tax credits, cheaper energy, and more flexibility than a long term contract.

The average cost in 2019 for installation and maintenance comes out to about $22,000 after all incentives and tax credits. This would take close to 12 years to pay back through the saving you get, on average. And you could expect a reasonable 25 year return of 32K. 

This is all based on estimates on solar power savings and are subject to myriad market fluctuations as well as equipment quality and geographic location. But the moral of the story is that PV systems can function as a reasonable long term investment.

If you go through a PPA though, you will only benefit from cheaper electricity and the provider of the PV system will gain the financial returns over the long term – usually 10-20 year agreements.

This is not meant to discourage going with PPAs at all; it’s just something to consider based on your overall goals with renewable energy.

Going With a PPA

Overall, PPAs can make a lot of sense for those who are not wanting to spend the money on the installation and maintenance of solar panels. A PPA in the context of retail electricity entails installing and maintaining the PV system at a customer’s home. After an agreement has been made, the retail provider or third-party provider will offset the costs of the household’s energy bill with the cheaper renewable energy. It’s a win-win for both parties with a much lower ceiling for the consumer than the provider. 

Overall, this is an important option to explore. There are many nuances to the overall process, but we hope this piqued your interest on the overall option. 

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