Disadvantages of power purchase agreements and leases
- PPAs and leases can be complicated and organizations must dedicate time and money to ensuring that they negotiate a fair and equitable contract with the solar developer.
- Since the third-party, typically the installer, owns the system, the individual or business will not be able to take any incentives like SRECs or grants.
- At the end of the life of the contract (typically 15 years), you will usually have three options: purchase the system at fair market value, extend the life of your PPA or lease, or have the installer remove the panels from the roof.
- Most PPAs may increase the price you pay for the electricity your system produces over the life of your lease. This is known as an escalation rate, or escalator, for short. Sometimes those escalation rates are very steep, so make sure you look closely at the fine print of your contract.
- Third-party ownership is only available in certain states.