David,

An acronym dictionary that I just consulted, lists 125 different meanings to "PPA". I presume that the meaning of "PPA" in your case, means that you are purchasing a system rather than leasing it. There is an excellent article in the August 2016 edition of Consumer Report magazine that compares the financials of :

1. Purchasing a system by paying cash

2. Purchasing a system by financing it with a secured loan (HELOC)

3. Leasing a system

In the example presented, the savings are highest with option 1; next highest with option 2; and the least with option 3. Also, there are some unique and expensive problems that you can encounter if you lease as opposed to owning a system if you ever decide to sell your home.

But the financial benefit of owning a system at all, is dependent on cost of energy in your area and the purchase price of your system. If the cost of electricity in your area is low (or if the cost of the system is very high), it could take so long to recover a return on your investment in a solar energy system, that the advantage of installing it, is minimal and perhaps not worth the effort.

Here in northern California, we have some of the highest utility rates in the country. Our 4 tier pricing structure begins at $0.18 per Kwh and goes up to $0.40 per Kwh. Our average cost for our electric bills over the year, is around $320 per month. When we had guests with an infant visiting last summer, we ran our air conditioner continuously and had an electrical bill of over $600; the majority of our bill was at the rate of $0.40 per Kwh

We just had a 8.5Kwh system installed yesterday; it will be turned on today. The company designed our system based on our utility bills over the past year. They prepared a detailed report that computed that our system will pay for itself in around 7 years. Our electric bill per year will be $120 ($10 per month), so that we can access the grid, to sell our surplus electrical production and to provide us with power in the evenings and during winter days when the system does not provide enough energy for our daily use. Assuming an increase in the cost of electrical energy of 5% per year, the company's program computed a return of over $155,000 over the 25 year life of this system. California has more solar energy systems than any other state. It makes a lot of sense to go solar here because

1. The cost of electricity from the utility companies is so high.

2. We have over 300 sunny days per year.

3. The intensity of light reaching the ground is very high, due to the low amount of humidity in the air.

4. Solar energy systems pay for themselves in a reasonable amount of time.

We bought panels produced by one of the leading US companies, SunPower. In their specifications handout, they indicate that the output of the panels can degrade by something like 0.5% per year. The SunPower brochure states that by year 25, that the panels will still be producing around 87% of what they did in year 1. I suppose that if this is a problem for us, we could simply add another panel or 2 from the $155,00 we saved in our utility bills from year 7 to 25!

If you are worrying about producing too much electricity in the future, buy an electric car!

Good luck with your decision,

John

Thanks for sharing your experience.

FWIW, PPA is a widely recognized acronym in the solar field, meaning "power purchase agreement". In both a lease and a PPA, you don't "own" the system. For a lease you pay a fixed monthly amt. whether you use the electricity or not. For a PPA you just agree to buy power produced by the panels.

This is one of the only articles I found directly discussion the difference between PPAs & solar leases:

Solar Leases vs Power Purchase Agreements (PPAs) - HelioPower

BTW I should clarify what I meant in the original post: the big solar residential PPA & lease companies claim to save you a lot of money. But if you run the numbers it is always much better to buy or finance your own system. Especially with the tax credit. However, I don't want to take that approach myself, right now. Now, you will almost certainly save some money with either non-ownership option, lease or PPA, vs. continuing to buy the amount of energy you're buying now from the utility...but embedded in that statement are a few of assumptions and possible gotchas.

I really need to see that consumer reports article. Hopefully they can cut through the BS. The more I read about how cheaply the Chinese are producing panels, the more mystified I am by some of the costs of these systems, either arbitrarily assigned in the lease/PPA providers, or actually charged to people who buy them. I guess it's kind of an axiom that most people in the West will pay too much for what they own...especially if it's something "new and shiny" like solar panels or smartphones. It's kind of what keeps the whole system greased. Alas, I am not one of those people. When I got some plumbing work including installation of a tankless water heater I shopped around and got 2 complete pie in the sky estimates, one high one, and one that was actually reasonable. That guy did excellent work...in fact I'm almost sure he did a better job than the other three because he realized he wasn't dealing with an idiot. The pie in the sky estimators assume you will stupidly pay $2500 more than you should because you want something "different". (even though it is standard water heating technology in Asian and Europe)

A bit of a dead thread but I'll conclude for posterity...

The link I included above is actually wrong and my understanding was too. It's likely the salesperson (more like sales kid) who came to my house either lied or didn't understand the agreement himself. The PPA says you buy _the energy the system produces_ whether you use it or not. So the PPA and lease are hardly different. One obligates you to a fixed monthly cost, the other a variable cost that will add to the same amount over the year as the lease. They aren't going to grossly miscalculate how much the panels produce. If anything they underestimate it slightly, which means the PPA could be slightly more expensive than you expect it to be. Both have guarantees of a certain amount of production.

I think solar is still expensive for what it is because it's a shiny new thing...no pun intended. Our install costs are higher than places like Germany where the market is more mature. I decided to stay with a lease but shop around for a better price from a smaller, still local company that partners with a financial company for the lease part of the deal.

I bet on a so-called 40k system the typical solar installer is making almost 20k in real profit...not revenue. That's on a lease, on an outright purchase they make a bit less. Which is why they push the leases these days. (the lease underwriters make more money as well) It's all about economies of scale. If our standard form of thermodynamic heating & cooling was geothermal, geothermal systems wouldn't cost 30K. They cost that much because their markets are small. So to me the only "risk" to the PPA I signed is that in 10 years, solar becomes as standard as having a driveway and prices really do plummet to what would be reasonable for sticking some boards on your roof and connecting them with 12V wire. But I don't think that will happen that fast. Maybe in 20 years but by that point inflation will cancel the difference anyhow. So I'm pretty sure I come out ahead on this one.