Solar Nerd articles about: Leases and PPAs

I’m not a big fan of leases and power purchase agreements (PPAs). It’s a topic I’ve written about extensively. While usage of PPAs has been dropping over the past decade, they still were 28% of the residential market in 2021 according to Berkeley Lab. Sunrun, the biggest solar installer in the country, is responsible for a large part of that market share. While Sunrun offers a variety of payment options including purchases, monthly leases and PPAs are a main focus of their business strategy.

Selling a house is always a stressful event, so anything that adds complication is unwelcome. Having home solar panels can be no big deal or make selling your house more difficult, depending on how you paid for them. An upside is that solar panels can add significant value to a home, which is something that your real estate agent can help communicate. There are also some things that you should do as a seller to make sure that the next owner has access to monitoring and knows what to do if issues crop up.

Freedom Forever is a relatively new company on the solar installation scene, but it has grown very quickly, reaching 6th place on the Solar Power World list of residential solar installers. In the most recent year, Freedom Forever installed 92 megawatts of solar. The company operates in most of the major solar markets in the US and employs over 1,700 people. If you’re looking for a solar installer for your home, there’s a good chance that you’ve come across their name.

For the fiscally-minded homeowner (and what homeowner doesn’t care about their investment?), adding home solar panels can be a way to add equity to your house, slash electricity costs, and make a great long-term investment. On top of that, you’ll be helping the environment too. Sounds like a no-brainer? Maybe. How much you can actually save with solar panels depends on a few factors. For example, not every roof is equally suited for solar panels.

A salesperson knocks on your door and tells you that you can get solar panels installed on your home for free. Sounds too good to be true, doesn’t it? It is. When a solar company pitches you on “free” solar panels for your home, they are referring to a solar lease or power purchase agreement (PPA) that requires no payment upfront. The company will install the solar array on your home, and you get to use the solar electricity it generates.

As more people realize their disadvantages, solar leases and power purchase agreements (PPAs) are shrinking in popularity, dropping from a high of 59% of the market in 2012 to only 37% in 2019. That’s still a sizeable chunk of the market, and some people regret signing these contracts. With 20 year contracts being common, solar leases can tie you up for a very long time. Many consumers sign them without doing adequate research, especially after being solicited by door-to-door or kiosk salespeople.

Solar leases and power purchase agreements (PPAs) are similar ways of getting “free” solar panels with no money down. They’re marketed heavily by big installers like Sunrun, Sunnova and Momentum. Leases and PPAs offer a compelling pitch to consumers: with no upfront cost, you can get solar power for your home. You pay a certain amount of money every month, but how you are billed is where leases and PPAs differ.

If you live in a city where home solar is popular, like any of the big cities in southern California or the Bay Area, you’ve probably heard of Sunrun. Maybe you’ve seen their blue vans rolling around town, or had their sales people knock on your door. Sunrun is the largest home solar installer in the US by a wide margin: they currently have about 23% of the US residential solar market.

The residential solar industry in the US is dominated by a few very large companies, and one of the biggest is Momentum Solar. According to Solar Power World, Momentum installed almost 90 megawatts of solar panels last year. For perspective, the average home solar system is 6.4 kW in size. If Momentum installed only average sized systems, their installations in 2019 would be equivalent to 14,000 home systems. That’s a lot!

If you’ve ever heard of getting “free” solar panels, that’s usually referring to solar leases. With a no-money-down lease, a company installs solar panels on your house. There’s no loan principal to pay off either: you simply get to use the panels for 20 years or more in exchange for a small monthly cost. Sound too good to be true? Often it is. What are solar leases and power purchase agreements?