Solar Power Purchase Agreements
Often referred to as SPPAs, Solar Power Purchase agreements are
long-term contracts in which a homeowner has a photovoltaic (PV)
system installed on the roof of owned or leased property with
the intention of using it as a primary energy source.
The system is installed by a third party who owns the system
and keeps it running and in working order. Under a "solar
services" agreement, the homeowner pays for the energy that
the power source provides rather than the power source itself.
The "solar service provider" agrees to provide power
through the PV system and maintain it as necessary in exchange
for a predetermined fee.
Solar Power Purchase Agreements offer many benefits to homeowners
including:
- A Stable Energy Source
Solar power is attractive to consumers because of its unique
stability. Unless the sun stops shining (and in that case it
won't really matter, will it?), then you can count on a solar
power source to keep providing you with at least some of the
energy you need to run your household.
- No Upfront Costs
Many people would love to have solar power sources, but they
can be quite expensive and therefore, difficult to pay for upfront.
With a SPPA, however, there is no charge for the power source
itself, since you are not buying it, just the services (i.e.
energy) it provides.
- Lower Energy Costs
Since solar power itself if free, the only cost involved is
the price of the materials needed to harness it. As scientists
find cheaper materials that are able to trap and convert more
and more sunlight, the cost of soaking up the sun is lower than
ever. Although third parties are free to set their own price,
it is typically equal or less than what the homeowner is currently
paying the power company for their electricity. Rates are subject
to go up due to inflation, maintenance costs, and other similar
considerations.
- No Liability
Since you don't actually own the solar power source, you are
not responsible for fixing it or paying for repairs if it is
damaged or stops working properly just as you aren't responsible
for your current electric meter if it stops working-the company
is liable, not you, so there are minimal risks involved.
- A Green Footprint
Obviously, solar power is the "green," economically-friendly
way to power your home. If you want to reduce your carbon footprint,
a SPPA is a convenient and affordable way to do so.
- Home Value
Although there is no guarantee, it is quite possible that you're
the value of your home will go up after the installation. A
solar-powered home has the potential to become a hot selling-point
in the not-so-distant future. Of course, the new homeowner will
need to be willing to take over the existing contract with the
solar services provider.
In addition to the many benefits of a SPPA, there are some potential
pitfalls to be aware of before signing on. Depending on the quality
and capabilities of the PV system, you may end up paying a solar
power bill and an electric power bill.
Of course, the SPPA is a service-dependent bill, meaning you
only pay for the power the system provides, so it might not be
that much of a factor after all. One other disadvantage is when
you move from your home you may still owe money on the solar system,
depending upon which company you have an agreement on. The new
owners may take over your contract or choose not to do this.
So, it is important to understand your financial obligations
when entering into a Solar Power Purchase agreement. Getting several
bids and understanding what is offered and how they differ will
give you piece of mind when going solar.
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