A Guide to Understanding Commercial Solar PPA Financing.

What is a Power Purchase Agreement (PPA)?

With a Power Purchase Agreement, or PPA, your company does not own its solar system.  You sign a long-term contract (typically 15-20 years) to purchase power at a discount from a provider.  You need to have an area to install the solar power such as a roof, parking deck, or open ground space.  In a sense, you are leasing your space to the PPA company to sell you discounted solar power.

The solar PPA provider designs, purchases the equipment, installs, and owns the solar system.  As well, the PPA gets all of the incentives including the federal tax grant, accelerated 100% bonus depreciation, and SREC revenue.  Since the PPA company’s return is based on your roof’s solar production, they will maintain the system to ensure it produces solar energy at peak levels.  At the end of the PPA agreement, you will have a purchase option.

What are the benefits of a solar PPA?

There are three benefits to choosing a solar PPA

1. Your enterprise will have no out-of-pocket costs to installing a solar PV system.
2. Your business will get discounted electric energy for your building.
3. Your organization will gain certainty on its long-term electric costs, since the contract will specify your rates and escalators.
   
   

Why might a solar PPA be wrong for my company?

But, Power Purchase Agreements are not right for every organization.

1. Your company only recognizes a fraction of the energy savings that your solar PV system is producing.
2. PPAs are long-term contracts.  If you are not planning on staying in your current location for the duration of the contract, a PPA might not make sense.
3. Your business will get no income stream from SRECs produced from your solar system.
4. Your organization will not be taking advantage of amazing financial opportunity driven by strong federal incentives that can produce a tremendous return on investment.
   
   

How do I choose the right solar financing for my business?

Most PPA providers have one interest in your solar project, their interest.  Geoscape Solar, instead, focuses on you and your enterprise’s goals.  We know that PPAs are right for some organizations, but not for others.  We are financial experts who take the time to understand all of the issues that can impact your solar solution choice.  Geoscape Solar runs all of the numbers with transparency so you can see how the factors of electric rates, SREC prices, and financing options can impact your financing selection.  Geoscape Solar offers Solar Choice Financing™ because our clients deserve to know their options and make the choice that is best for their organization.