What happens at the end of my PPA term?
When a power purchase agreement expires, building owners typically have three options: renew the agreement, buy the system outright, or have it removed.
A power purchase agreement (PPA) is typically structured as a 15 to 25-year contract. When the term ends, most agreements give the building owner three choices.
The first option is to renew the PPA, usually at renegotiated rates. Since the system is fully depreciated and the developer has already recovered their investment, renewal rates are often lower than the original contract terms. This can be an attractive option if you want to continue receiving solar power without taking on ownership responsibilities.
The second option is to purchase the system at fair market value. By the end of a PPA term, the system still has productive life remaining — most solar panels are warrantied for 25 years and often produce well beyond that — but its market value has decreased significantly. Buying the system lets you capture the remaining energy production without ongoing PPA payments, effectively getting very cheap electricity for the system's remaining useful life.
The third option is to have the developer remove the system at their expense. This is less common since the system still has value, but it's typically included as a contractual right.
The best choice depends on your building's situation: how much useful life the system has left, your electricity costs at the time, whether you want to take on maintenance responsibility, and your long-term plans for the property. It's worth reviewing your PPA's end-of-term provisions well before the contract expires so you have time to evaluate your options.