A Power Purchase Agreement, or PPA, is one of three ways a homeowner can go solar. It is the zero-down option most common in Maryland. You do not buy the panels. You buy the electricity the panels produce, at a rate lower than what your utility charges.
What a PPA actually is
A PPA is a Third Party Ownership (TPO) agreement. A provider, not you, pays for the panels, the inverters, and the install. They own the equipment on your roof for the full term of the agreement, typically 20 to 25 years.
Your job in a PPA is simple: you agree to buy the clean power your roof produces each month at a locked per-kWh rate. That rate is set below your utility's rate at signing. If the utility raises rates (they usually do) your savings widen over time.
The metaphor
A loan is buying a car. A lease is renting one with a fixed payment. A PPA is paying only for the gas the car actually burns, and only when you drive it.
How a PPA differs from a lease and a loan
All three are valid paths. They just work differently.
| Question | Solar loan | Solar lease | PPA |
|---|---|---|---|
| Who owns the panels? | You do | Provider | Provider |
| Upfront cost | Usually none, loan covers it | Zero | Zero |
| Monthly payment | Fixed loan payment | Fixed lease payment | Variable, per kWh produced |
| If panels produce less | You still owe loan | You still owe lease | Bill drops automatically |
| Who handles maintenance? | You do | Provider | Provider |
| Who carries the production guarantee? | N/A | Provider | Provider |
| Transfers on home sale? | Loan paid off at closing | Yes, to new owner | Yes, to new owner |
What you pay vs what the utility charges
Under a PPA your monthly solar bill is the per-kWh rate, locked at signing, multiplied by the kWh your panels produced that month. Compared to the utility bill you were paying, two things happen.
- The rate is lower on day one. A PPA only makes sense if your locked rate is below what the utility charges. If the math does not beat the utility, we tell you to skip it.
- Your rate does not follow utility hikes. Your PPA rate has a small, fixed annual escalator, far below typical utility rate increases.
The honest pros and cons
What PPAs are good at
- Zero upfront cost, zero install cost, zero maintenance cost
- Lower rate on day one than your utility
- All provider risk: if the panels underperform, the provider eats it
- Works for homeowners with little or no tax appetite, because the provider handles incentive capture, not you
What a PPA is not good at
- You do not own the hardware, so you do not build equity in a physical asset
- You cannot pocket owner-side incentive value, because the provider owns the system
- Early cancellation language varies, so read the buyout section carefully
Incentives, plainly
Solar incentives shift year to year. When you request a quote we walk through what is currently available for your state and your specific program option. We do not anchor the savings story to any one incentive, because those rules change.
How to tell a real zero-down PPA from a sales pitch
If a rep is pushing a PPA, ask four questions. A straight rep answers in one sentence each.
- What is the per-kWh rate in year one, in writing?
- What is the annual escalator, and is it capped?
- What is the production guarantee, and what happens if the system falls short?
- What happens to the agreement if I sell the home before the term ends?
Anything other than clean numbers and plain answers is a red flag. A PPA is a long agreement. You should know the four answers above before you sign anything.
If your rate does not beat your utility's rate on day one, a PPA is not the right product for you. That is the whole test.