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Understanding Solar Power Purchase Agreements

by Glenda Walters

Whether it is an increased awareness of the impact of climate change or the desire to reduce carbon emissions, more people are turning to solar energy as an alternative to traditional power sources. As a result, solar power purchase agreements have emerged as a popular means of procuring solar energy for homes and businesses. Here's what you need to know.

What Is a Solar Power Purchase Agreement?

A solar power purchase agreement, or PPA, is a contract between a solar power provider and a customer outlining the terms of a solar energy supply. The solar provider installs and operates a solar panel system at the customer's home or business location and sells the energy produced to the customer. The customer agrees to buy the power generated from the system at a fixed rate for a specified period. In other words, the customer pays for the energy they use but doesn't have to pay upfront for installing and maintaining the solar system. 

Who Needs a Solar Power Purchase Agreement?

Anyone who wants to use solar energy but cannot or does not want to invest in a solar panel system can opt for a PPA instead. Residential and commercial property owners, non-profit organizations, universities, and governments are all eligible for PPAs. PPAs are especially beneficial for customers with high energy usage but limited funding for installing and maintaining solar systems.

What Are the Benefits of a Solar Power Purchase Agreement?

There are many benefits to a PPA, including:

  • Low upfront costs. One significant advantage of a PPA is that the customer does not have to invest in installing and maintaining a solar panel system. The solar provider takes on all the risks and responsibilities of ownership and maintenance of the system. 
  • Long-term savings. In addition, PPAs offer long-term cost savings to customers. The fixed rate at which the customer buys the solar power is often lower than the prevailing utility rates, resulting in significant savings over time.
  • Clean energy. PPAs also reduce the customer's carbon footprint and help to improve the environment by reducing greenhouse gas emissions. Solar power is clean energy and does not generate harmful pollutants like fossil fuel-powered energy sources.

Solar power purchase agreements are an innovative way of accessing and using solar energy without the burden of ownership and maintenance. They offer a cost-effective and environmentally friendly way of meeting energy needs. As the importance of renewable energy continues to grow, more people are turning to PPAs to provide a sustainable, affordable, and clean energy solution.

For more information on solar power purchase agreements, contact a professional near you.

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