Cost + savings
What is a solar PPA (Power Purchase Agreement)?
7 min read
A solar PPA — Power Purchase Agreement — is one of three ways to finance residential solar. Instead of buying the system yourself, a third party (the lessor) installs and owns the panels on your roof. You buy the electricity they produce at a locked-in per-kilowatt-hour rate that's lower than your utility's. Zero down. Zero maintenance. The lessor handles every repair for the life of the contract.
Kaizen's lease/PPA options are LightReach, Sunrun, and EnFin. Different homeowners pick different lessors based on terms.
How a PPA actually works
- Kaizen designs and installs the system on your roof.
- The lessor (LightReach, Sunrun, or EnFin) owns the system, including all hardware and warranties.
- You sign a 20-25 year agreement to buy the power the system produces at a locked-in per-kWh rate, typically 20-40% below your utility's current rate.
- Every month, you pay the lessor for what the system produced (not a flat lease payment — actual production-based billing).
- The lessor handles all maintenance, monitoring, and repairs.
- At the end of the term, you can renew, buy out the system, or have it removed.
PPA vs. loan vs. cash — quick comparison
| Cash | $0-down loan | Lease / PPA | |
|---|---|---|---|
| Upfront cost | Full system price | $0 | $0 |
| Monthly payment | None | Loan payment | Per-kWh produced |
| Maintenance | Yours (covered by warranty) | Yours | Lessor's |
| Tax conversation | With your CPA | With your CPA | Lessor's, not yours |
| System ownership | Yours from day one | Yours after payoff | Lessor's for the term |
| Lifetime savings | Highest | Mid | Lower (but $0 risk) |
Who PPAs work for
- Homeowners who want a lower utility bill from month one with no out-of-pocket cost.
- Homeowners who don't want to own or maintain hardware.
- Homeowners whose tax situation doesn't allow them to use any tax credit themselves.
What to watch for in a PPA contract
- Escalator — many PPAs increase the per-kWh rate 1-3% per year. We help you compare flat-rate vs. escalator structures.
- Buy-out option — most contracts let you purchase the system mid-term at a fair-market value defined in the contract.
- Production guarantee — the lessor should guarantee the system produces a minimum annual kWh. If it underproduces, they pay you the difference.
- Roof rights — make sure the contract has clear language about roof repair, removal, and home sale transfer.
Common questions
Frequently asked
- What happens if I sell my house with a PPA?
- Most modern PPAs are transferable to the buyer at no cost, provided the buyer's credit qualifies. If they don't want it, you can buy out the contract or have the system removed (at your expense). Get the transfer terms in writing before signing.
- Are PPAs good or bad?
- Neither — they're a tool. PPAs are good for homeowners who want lower bills with zero risk and zero hardware ownership. They're worse for homeowners who can pay cash and want maximum lifetime savings. We walk through the math both ways.
- What's the difference between a PPA and a lease?
- A lease has a fixed monthly payment regardless of production. A PPA bills based on actual kWh produced. Both have the same ownership structure (lessor owns the system).