How does an operating lease differ from a PPA?
Both involve a third party owning the system, but the payment structures and benefits differ significantly.
With both an operating lease and a Power Purchase Agreement (PPA), you reduce your monthly energy bill and avoid the upfront cost of purchasing solar panels and installation. However, neither structure makes you the system owner, so you typically cannot claim tax benefits.
Operating Lease: With a solar lease, you pay a flat monthly fee outlined in your lease contract. This fixed payment typically costs less than your previous utility bill, providing predictable budgeting.
Solar PPA: A PPA works more like a utility bill — you pay for each kilowatt hour (kWh) of solar energy you actually use. Your monthly bill fluctuates based on system production, meaning you pay less in months with lower production.
Savings Potential: A PPA often has greater savings potential over the contract term because your payments are directly tied to energy generation. A lease provides cost certainty, while a PPA aligns your payments with actual production benefits.