When it comes to installing solar panels, most homeowners choose one of three contract options: Power Purchase Agreement (PPA), a Lease, or a Purchase. Each choice offers distinct benefits and responsibilities, from paying for the power generated (PPA) to paying a fixed monthly fee (Lease) or owning the system outright (Purchase). Below, we’ll break down each arrangement and how it impacts your monthly bills, property rights, and long-term costs.

1. Power Purchase Agreement (PPA)

• Pay per kilowatt
  Pay the solar company a set amount for every kilowatt your solar system produces each month, leading to fluctuating bills.
• Ownership
  Despite the word “purchase,” you are not purchasing the solar system—only the power it produces. You won’t own the system, but your PPA may include an option to buy it at fair market value after a set period.
• Contract Length
  Most PPAs last 20–25 years.
• UCC-1 Lien
  A UCC-1 lien is recorded with the Secretary of State, indicating that the solar company owns the system. It does not become a permanent fixture of your home.
• Responsibility for the System
  The solar company is generally responsible for any repairs or issues not caused by you.
• Power Bills
  You’ll usually still see a monthly power bill—potentially minimal if your system is functioning well. Gas usage often comprises the bulk of your bill, if applicable. Be wary of any solar company that promises no power bill at all.
• True-Up Bill
  Expect an annual true-up bill in addition to monthly statements.
• Selling Your Property
  If you’re still in a PPA when you sell your property, your typical options are:
  1. Buy the system
  2. Transfer the system to your new home
  3. Have the buyer assume the PPA
     
     

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2. Lease

• Monthly Payment
  Pay a fixed monthly fee to the solar company for using the panels. (Some leases can be prepaid but are less common.)
• Contract Length
  Most leases last 20–25 years.
• Ownership
  You do not own the solar system. However, the lease might give you the option to purchase it at fair market value later.
• UCC-1 Lien
  A UCC-1 lien is recorded to show the company’s ownership. The system isn’t permanently attached to your home.
• Responsibility for the System
  The solar company typically covers issues you didn’t cause.
• Power Bills
  You’ll still receive a monthly power bill, though potentially smaller if the system is performing well. Again, be cautious of any guarantee of “no bill.”
• True-Up Bill
  An annual true-up bill is generally expected alongside monthly invoices.
• Selling Your Property
  Similar to a PPA, if you sell your home mid-lease, your usual options are:
  1. Buy the system
  2. Transfer it to your new home
  3. Have the buyer assume the lease
     
     

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3. Purchase

• Ownership
  You own the system outright.
• Responsibility for the System
  If something goes wrong and it isn’t covered by warranty, you’re responsible for repairs.
• Financing
  Many homeowners finance their purchase; some pay in cash. If financed, a UCC-1 lien is recorded until the system is paid off.
• Power Bills
  You’ll likely still receive a monthly bill, usually minimal if the system is functioning optimally. Gas usage often remains the larger portion of your bill.
• True-Up Bill
  Expect an annual true-up, in addition to monthly statements.
  
  

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About the Author

This post was written by Andrea Chapman, founder of Chapman Law, P.C. Andrea specializes in real estate law, business litigation, and assisting clients with solar contract disputes in California. If you have any questions about your solar agreement, contact Chapman Law, P.C. at (559) 257-2822.

About the Firm

Chapman Law, P.C. is a dynamic, award-winning luxury law firm located in the heart of Old Town Clovis in California. Recognized for our premium, client-focused approach, we specialize in real estate litigation and transactions, employment law, agricultural law, business litigation and transactions, and estate planning. We take a proactive stance to help clients avoid costly litigation, providing tailored guidance and solutions for every unique situation. Our firm fosters a supportive, growth-oriented environment where team members collaborate to deliver customized legal services that make a meaningful impact on the community.