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Do all solar lease or solar and PPA payments increase every year?

asked 2015-01-30 15:21:15 -0500

HeathL gravatar image

Are there options where I can pay a fixed amount every year? I feel like I'm more protected financially if I get a rate that is fixed rather than one that goes up.

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answered 2015-02-06 20:20:07 -0500

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updated 2015-02-06 20:20:07 -0500

energysage gravatar image

Hi HeathL,

The short answer to your question is 'no'. Not all solar lease and power purchase agreement (PPA) products have solar rates that increase every year.

Some solar lease/PPA options do offer a solar rate that increases over time - this is called a 'solar escalator', and is usually in the range of 2-2.5% per year. In theory, this increase will be slower than electricity from the average American utility, which has increased at a rate of about 4% annually over the past 10 years. (Read more about utility inflation.). This means that you'll save money on your power bills.

However, utility electricity rates are known to fluctuate - they do not always increase in a steady line. This means that they may go down one year and you could end up paying more for your solar electricity than you would have for electricity from the grid. This situation should only be temporary (1-2 years out of 20 in a worst case scenario), but if you want to avoid it altogether, you'll want to try to lock in a solar rate that has no escalator. Most solar leasing companies will offer such an option, but you might have to make a partial up-front payment to lock it in.

You can read more about the types of solar leases/PPAs in the following article:

https://www.energysage.com/solar/financing/solar-leases-and-solar-ppas

And you can read more about the advantages & disadvantages of solar leases/PPAs vs solar loans in this article:

https://www.energysage.com/solar/financing/comparing-solar-loans-vs-solar-leases#pros-cons

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Asked: 2015-01-30 15:21:15 -0500

Seen: 347 times

Last updated: Feb 06 '15