Discover how a Solar Power Purchase Agreement allows you to harness clean energy without upfront costs while reducing electricity bills and supporting your sustainability goals.
Access the PPA Information Guide Here
A Solar Power Purchase Agreement (PPA) is a financing arrangement where a third-party provider installs, owns, and maintains a solar energy system on your property. Instead of purchasing the equipment, you agree to buy the electricity the system produces at a predetermined rate, usually lower than your local utility’s rates. This allows you to benefit from solar energy without taking on the cost or responsibility of owning the system.
Once installed, the system generates clean electricity that powers your facility. You only pay for the power the system produces, just like you would with your utility bill, but typically at a lower and more predictable price. The owner handles system monitoring, maintenance, and repairs, making the arrangement simple and low-risk for the customer.
One of the biggest advantages of a solar PPA is that it requires little to no upfront cost. Because the third-party owner pays for the equipment, installation, and maintenance, organizations can start saving on energy immediately without tying up capital. This is especially helpful for schools and nonprofits that may not have budget flexibility for large infrastructure investments.
PPAs also provide long-term protection from rising utility rates. The price you pay for solar electricity is locked in or increases at a predictable, modest rate, which helps stabilize energy expenses over time. This predictability makes budgeting easier and allows organizations to plan more confidently for future operating costs while benefiting from lower energy prices.
The most important contract term in a PPA is the rate you pay for solar electricity, which may be fixed or increase slightly each year. Contracts typically last 15 to 25 years, giving you long-term access to predictable energy pricing. Many agreements also include options to purchase the system later if your strategy changes and you decide you want to own the equipment.
Other important terms include performance guarantees, maintenance responsibilities, and system monitoring. The solar provider is usually responsible for keeping the system operating properly and meeting minimum production levels. You’ll also want to review insurance, liability, early termination terms, and what happens if you sell the property to ensure the agreement fits your long-term plans.
First, consider the physical side.
You’ll need enough roof or land space with good sunlight and little shading. The building or site must be strong enough to support solar panels for the full length of the contract. You also need to own the property or have a long-term lease so you can commit to the agreement.
Next, look at financial and operational factors.
PPAs tend to work best for properties that use a lot of electricity and pay high utility rates, since the potential savings are bigger. Your tax situation also matters. If your organization can’t fully use solar tax credits, a PPA can be especially helpful because the third-party owner uses those incentives and passes some of the savings to you through lower energy rates.
Finally, think about how a PPA fits your overall goals.
PPAs are a good option for organizations that want predictable energy costs, protection from rising utility rates, and a way to show environmental leadership. Working with an experienced solar developer, such as Harvest Solar, can help you evaluate your situation, choose the best financing option, and connect with investors if a PPA turns out to be the right path for your clean energy and financial goals.
Schools often operate under tight budgets and may not have funding available for large capital projects like solar installations. A PPA allows schools to access clean energy without upfront costs while immediately reducing electricity expenses. The predictable pricing structure also helps schools better plan their budgets over the long term, even as utility rates continue to rise.
Beyond financial benefits, solar PPAs support educational and community goals. Solar installations provide real-world learning opportunities for students and demonstrate environmental leadership to parents, staff, and the broader community. By adopting solar through a PPA, schools can reduce their carbon footprint while modeling responsible, forward-thinking decision-making.