Solar Power Purchase Agreement vs Solar Lease
Content posted – May 7, 2019
As we all know, the need for renewable and greener sources of energy is more important than ever. With this in mind, more and more Arizona homeowners are choosing to install solar panels on their homes. While this was simply not possible in years gone by due to the heavy investment required, there are now more options than ever. You can purchase solar direct, or lease solar panels. There are benefits to both.
If you want solar panels in Arizona without buying them outright, we have great news because you have two opportunities to do so; with a solar lease and a solar power purchase agreement (PPA). Which should you choose? How do they differ? We’re going to answer all your questions today as we dive into PPA vs Solar lease in Arizona!
As the name suggests, this is a system where the solar panels will be leased to you. Rather than owning them, the solar leasing company retains ownership while you pay a flat monthly fee. Regardless of production or the time of year, you’ll always pay the same amount for your solar.
Typically, your lease will last for 20 years and the leasing company will take care of insurance, monitoring, and the power guarantee. What’s more, they should also take care of equipment since it’s still under their ownership. This is definitely an advantage of a lease option, having the solar panels covered under warranty for the duration of your lease means you are not having to come out of pocket to pay for expensive repairs.
If you want to benefit from solar panels for a simple monthly fee, this is a great way to get started. However, you have another option too…
Solar Power Purchase Agreement
On the other hand, a so-called PPA has a variable pricing structure. Rather than paying the same amount per month, the amount you’re charged will depend on production. Much like other household bills, you pay as production increases. In Arizona, there is year-round sun, so PV panels are generating energy all year.
What does this mean? Essentially, you’ll pay more in the summer than you will in the winter. The energy resources are relied upon more during the summer to run the AC unit and keep your home cool. Many believe that solar panels perform better in the summer months, but the extreme Arizona heat actually has a negative impact on energy production. Meanwhile, everything will slow down in the colder months because you are not needing to produce and consume the same amount of energy as you do in the summer.
Which is Best?
Now you understand how both agreements work, you’re probably wondering which you should choose for your own home. In truth, it completely depends on how you wish to pay. While some prefer paying a flat fee and not worrying about the fluctuation, others only want to pay for what they generate. During Arizona summer months, your payments in a PPA will be higher than in a solar lease. In the winter, payments will drop right down and balance everything out.
With regards to everything else, it’s almost identical. For example, your lease will probably last for 20 years, the leasing company will take care of equipment, and they should also provide additional services such as a power guarantee, monitoring, and insurance. Another thing to consider is an energy audit, if you convert to solar with intentions to save on your energy bill, you may be surprised when you come to find out that your home has poor attic insulation or inefficient duct sealing. Having an audit performed on your home will give you all the information you need to make sure your home is performing at peak levels during the Arizona summer months. A Pearl Certification can increase the value of a home by up to 15% upon evaluation. Having a combination of an energy efficient home, working in conjunction with solar panels makes for an ideal money saving situation.
While doing research, you might find the option to open an ‘escalator’ contract and this is where payments increase every year. Depending on the contract, the increase could be 2% or it could be 3%. Either way, you’re guaranteed to pay more with every year that passes, and we recommend steering clear of this option. Although your fees might start low, the amount you’ll be paying after 15 years will be extortionate.
Ultimately, your decision of whether to choose a PPA or solar lease comes down to how you want to be charged. Do you want to pay the same amount each month or do you want it to be based on production? If you are unsure about which solar option is right for you, you can contact us for a free solar consultation where we can address your needs and discuss the best options available for your home. These days, there are some wonderful products such as the SunPower Oasis and Helix for businesses. Meanwhile, SunPower Equinox is one of the best all-in-one systems for homes. Why not take advantage and become more efficient this year? We located right here in Phoenix, Arizona and would be happy to help facilitate your solar purchase, contact us to learn more about solar in Arizona.