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Leasing Now for Residential Properties

The Solar Power Purchase Agreement (SPPA) is an alternative to financing and owning the system. It offers you an opportunity to install solar power at your facility without paying upfront costs or worrying about system operation and maintenance. Sometimes referred to as a “third party” ownership model, this approach lets you focus on your core mission, while solar experts manage your energy system. For 15 to 20 years, you enjoy predictable, pre-set electricity prices, and power from a solar system that is a source of pride for your organization.

Power purchase agreements are a well-established contract mechanism. Many large businesses, such as Kohl’s and WalMart department stores, and institutions, such as airports and water districts, use these agreements for buying solar electricity. Those familiar with the power industry will find an SPPA is much like the traditional “power purchase agreement,” a common contract between utilities and large centralized energy plants. Because SPPAs represent a good investment opportunity, major investment firms such as Goldman Sachs and Morgan Stanley provide financing to these projects.

Benefits to you of an SPPA

Challenges

Demands no upfront expense in order to buy solar power
Provides predetermined electricity rates for term of contract, typically about 15 to 20 years
Offers production monitoring and metering by experts
System owners take responsibility for operation and maintenance of equipment
Supports renewable energy industry and local jobs (for installation and maintenance)
Offers possible path to meet your green policy objectives
Places emphasis on ensuring maximum productivity of solar system
Option to purchase the system at fair market value after set time period

Demands more complex negotiations and possibly higher transaction costs than buying system outright
Creates potential conflict between your desire to achieve green policy goals and save money on electricity
Ongoing administrative costs of paying separate electricity invoices, and allowing accesss to equipment by maintenance personnel
The SPPA will be owned by a special purpose entity that may have limited liability and limited assets, and the SPE parties may change over time
The host customer may be prohibited from making changes to property that could affect the solar production

As you consider the benefits of an SPPA, we also want you to know there are other ways to buy solar generated electricity. For example, you might buy your system outright. Ownership requires financing up front, and the ability to monitor the system production and maintain the equipment. You might finance your system with a lease.

In a lease-to-own financing agreement you typically make no, or little, down payment, and purchase the system with fixed monthly payments over time. Or, finally, you may have access to a green power program that allows you to buy renewable electricity directly from your utility. Both the SPPA approach and system ownership offer great benefits, and some challenges. This power purchase option is described first so you can compare it against the other options which are described in Chapter 5 of the Purchase Power Agreement Guide.

Whatever method you choose, once you install solar energy generating equipment, your organization joins the growing number of wise energy consumers who generate their power from sunshine, a fuel source that is clean and always free.

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