What Is a Solar Power Purchase Agreement?
By JC Pacific Corp Published 2026-09-01 Last professionally reviewed: September 2026
Under a solar power purchase agreement, or PPA, a third party owns the solar system and the homeowner agrees to buy the electricity it produces at a contract rate for a stated term.
How is a PPA different from a lease?
A lease commonly charges a monthly equipment payment. A PPA commonly charges for each unit of solar electricity produced. Either agreement may contain an annual price escalator and transfer requirements.
What should buyers review?
Examine:
- Price per kilowatt-hour
- Annual escalator
- Remaining term
- Minimum payment
- Production guarantee
- Maintenance
- Monitoring
- Roof-work procedure
- Transfer requirements
- Credit approval
- Buyout options
- End-of-term provisions
- Default remedies
- Utility-billing interaction
Can a PPA rate become less competitive?
Yes. Contract rates, utility rates, fixed charges, usage, and export credits can change differently over time. Historical savings do not guarantee future savings.
Frequently Asked Questions
Does the homeowner own the panels?
Generally, no.
Can the PPA be prepaid?
Some contracts allow prepayment or buyout, but terms vary.
Does a PPA appear on title?
It may involve notices, UCC filings, or other recorded or searchable interests. Obtain title and legal review.
Educational information
This content is for general educational purposes and is not legal, tax, appraisal, lending, electrical, engineering, construction, insurance, investment, utility-rate, or solar-production advice. Solar agreements, utility tariffs, incentives, tax rules, financing requirements, equipment warranties, and transfer procedures vary and change frequently. Buyers, sellers, and owners should consult appropriately licensed legal, tax, lending, insurance, real estate, electrical, solar, and appraisal professionals regarding a specific property. Never access, disconnect, modify, repair, or remove solar, battery, electrical, or utility equipment without appropriate authorization and professional qualifications. Battery systems may retain dangerous electrical energy even when other power appears disconnected.
Next step: Calculate remaining contract cost under the escalator and compare it with realistic utility assumptions.
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The next step is a conversation with a local agent.
JC Pacific Corp is an Irvine-based Southern California brokerage helping buyers navigate offers, escrow, and financing. Tell us what you are looking for and we will point you to current options across the region.
A note on legal advice: These guides provide general, educational information about California real estate practice. They are not legal advice and do not create an attorney-client relationship. Mortgage information is general education, not individualized lending, tax or legal guidance. For advice about your specific offer, contract, closing or financing, consult a qualified California real estate attorney and a qualified mortgage professional.