Solar PPA - Power Purchase Agreements: Weighing the Pros and Cons of a Buyout

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Solar PPA - Power Purchase Agreements: Weighing the Pros and Cons of a Buyout

Solar PPA - Power Purchase Agreements: Weighing the Pros and Cons of a Buyout

Solar Power Purchase Agreements: Weighing the Pros and Cons of a Buyout

As solar energy becomes more accessible and affordable, many homeowners and businesses are exploring various financing options to go green. One popular method is the Solar Power Purchase Agreement (PPA), which allows customers to install solar systems with little to no upfront costs. However, there may come a time when you consider buying out the PPA before the end of its term.

Typically, PPA contracts span 20 to 25 years and include a provision enabling homeowners to purchase their solar equipment at any point during the agreement. The question arises: When is the optimal time to buy out a PPA? What are the potential advantages and drawbacks of taking this step? Is there any benefit in buying out the contract early, before its scheduled termination? In this blog post, we'll delve into the pros and cons of PPA buyouts, equipping you with the knowledge to make an informed decision tailored to your specific circumstances.

Pros of Buying Out a Solar PPA

Ownership and Increased Home Value

By buying out your Solar PPA, you become the owner of the solar system installed on your property. This ownership can increase your property's value, making it more attractive to potential buyers if you decide to sell. Moreover, you will no longer have to transfer the PPA to the new owner, simplifying the selling process.

Reduced Energy Costs

As the owner of the solar system, you will no longer need to pay the PPA provider for the energy generated by the panels. Instead, you can enjoy reduced energy bills and even earn credits for excess energy sent back to the grid, depending on your location and net metering policies.

Avoid Escalation Rates

PPA agreements often include annual escalations in the price you pay per kilowatt-hour, which can add up over time. By buying out the PPA, you can avoid these escalations and secure a more predictable energy cost.

Tax Benefits and Incentives

Owning the solar system makes you eligible for tax benefits and incentives, such as the federal Investment Tax Credit (ITC) and other state and local incentives. These incentives can help offset the cost of buying out the PPA and result in substantial savings in the long run.

Cons of Buying Out a Solar PPA

Upfront Costs

One of the most significant drawbacks of buying out a Solar PPA is the upfront cost, which can be a considerable financial burden. Depending on the size and age of the solar system, you may need to invest a significant amount of money to become the owner, potentially straining your budget.

Maintenance and Repair Responsibilities

As the owner of the solar system, you become responsible for its maintenance and repairs. This responsibility means that you will need to budget for potential costs associated with keeping your solar system in optimal condition. While solar panels typically require minimal maintenance, unexpected issues can arise, leading to additional expenses.

Loss of Guaranteed Performance

PPA providers often guarantee a minimum level of performance for their solar systems. If the system underperforms, they are responsible for compensating you or fixing the issue. When you buy out the PPA, you lose this guarantee, potentially exposing you to the risks associated with underperformance.

Complexity of Buyout Process

The process of buying out a Solar PPA can be complex, as it often involves negotiating the buyout price, arranging financing, and navigating legal contracts. This complexity can be time-consuming and may require the assistance of legal or financial professionals, adding to the overall cost of the buyout.


Buying out a Solar PPA has its advantages and disadvantages. While it can provide you with ownership, reduced energy costs, and tax benefits, it also comes with upfront expenses, maintenance responsibilities, and potential risks. Carefully weigh these factors and consult with professionals to determine whether a PPA buyout is the right decision for you.

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