A Power Purchase Agreement (PPA) is a financial arrangement that allows businesses to benefit from solar energy without having to purchase or maintain the solar equipment themselves. Under a PPA, a third-party developer designs, finances, installs, and operates a solar energy system on the customer’s property—such as a rooftop, parking canopy, or open land. In return, the business agrees to buy the electricity the system produces at a predetermined rate, typically lower than the local utility’s retail price.
This setup enables businesses to access clean, renewable energy with little to no upfront investment. The developer assumes responsibility for the system’s performance, maintenance, and ongoing operation throughout the contract term—usually 10 to 25 years. Because the electricity rate is fixed or increases at a predictable rate, PPAs offer long-term protection against utility price volatility.
At the end of the agreement, businesses often have options to extend the contract, purchase the system at fair market value, or have it removed at no cost. Overall, a Power Purchase Agreement provides a low-risk, cost-effective path to adopt solar energy, reduce carbon emissions, and achieve sustainability goals while maintaining budget predictability.
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