How Long Is a Solar Power Purchase Agreement?

A solar power purchase agreement (PPA) is a fast way to go solar without hurting your budget. It’s essentially a means of renting clean energy without large up-front costs. Unlike solar leasing, another common solar financing option, the solar company is responsible for maintaining the equipment. Naturally, this raises the question: how long is a solar PPA and what options do you have when it’s over?

Typical Length of a Solar PPA

Most solar PPAs last between 10 to 25 years. Note there are longer-term PPA contracts, which have lower initial financing arrangements, making them a great option for those looking to spend even less on solar. At the end of the PPA, there’s usually the option to extend the term or enter a new agreement — especially with a reliable solar company that’s already stood the test of time.

What Happens if You End Your Solar PPA Early?

The consequences of ending a PPA early depend on the exact terms of the agreement. Still, you can count on early termination fees to compensate the power company for the energy lost from your panels and other practical complexities, such as how the solar provider plans to remove the panels.

It’s difficult, because the panels are directly connected to your roof and electrical system, and the solar provider legally owns the panels. The solar company and the homeowner usually have a greater financial interest in keeping the arrangement going. Above all, refer to your specific agreement and, when comparing solar providers, ask as many questions as needed to understand your options.

What if I Sell a Property With a Solar PPA?

When selling your home while in a solar PPA, you can choose to transfer the PPA to the new buyer or buy the solar system outright before the sale. In the former case, it’s best to be clear to prospective buyers. They may be glad to have solar panels, but anticipate them trying to leverage it for a reduced price. It helps to crunch the numbers so you can show how much the buyer can save on utility bills — especially given the greater price stability a PPA affords (even compared to fully out-of-pocket installations).

What Happens When Your PPA Ends?

At the end of its term, most solar PPAs provide three options:

1. Extend the PPA
2. Buy the system from the provider at fair market value
3. Instruct the company to remove the solar system

A reputable solar PPA provider often accommodates each option provided in the agreement at the term’s end, but it’s helpful to plan once your term is coming up. Be clear about what those options are and which one is to your greatest advantage.

Learn More About PPAs in Our Comprehensive Solar Guide

When it comes to PPAs, the duration varies according to your specific financing and power generation needs. As you shop around, be mindful of what type of financial rate you’re looking for and how long you’re looking to lock into a contract.

Contact us to discuss your solar financing options or download Solar Optimum’s Ultimate Guide to Going Solar. Here you can learn about your solar financing options, how PPAs compare to other options and much more.