Today I received a phone call from another solar company. They explained they are partnering with Xcel Energy in Colorado to provide solar with no loans or credit checks. How is this possible? They offer a PPA, or Power Purchase Agreement. But what does this mean?
With a PPA, a solar company installs solar equipment on your roof, but you don't own the system. Instead the solar company owns the system and sells you the electricity you generate at a set rate. This provides some savings over your electric bill, which is beneficial. You also benefit the environment by reducing your use of fossil fuels.
What are the drawbacks? First, you do not get any of the tax benefits of adding solar to your home. The solar company keeps those benefits. How much this affects you depends on your unique tax situation. We have a blog post addressing this soon, but we recommend speaking with your tax preparer in any case.
Another drawback is you are unlikely to save as much money. While solar companies say you have a fixed rate, that rate escalates every year. When you purchase your system you are locking in your electricity price for the next 25 or more years, with no escalation. This results in significantly more savings over the years.
If you're someone who appreciates using US made solar panels, you might not have the choice with a PPA. When you purchase a system you get to choose every aspect of the system, including American made products.
At the time of this writing, details on Xcel's program is not available online. We will write a new post with updated information when it is available. Until then, reach out to see just how much value purchasing a system offers.
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