WattThe / Commercial / PPA vs ownership
Two ways to go solar as a business: buy the system, or buy the power. Compare 20-year costs of a PPA against ownership with the tax credit.
A power purchase agreement puts the system on your roof at zero capital cost: a developer owns, operates, and maintains it, and you buy the output at a contracted rate — typically below your utility rate on day one — with an annual escalator of 1–3%. Ownership flips the structure: you fund the capex (often $1.30–2.00/W at commercial scale), capture the 30% investment tax credit and accelerated depreciation directly, and keep every kWh at zero marginal cost for the life of the equipment.
The pattern the numbers usually show: PPAs win on simplicity, balance-sheet treatment, and transferring performance risk; ownership wins on total 20-year cost, often by a wide margin — provided the business has the tax appetite to use the credit and depreciation, which is the single most common deal-breaker. Nonprofits and low-tax entities lean PPA (or explore direct-pay provisions) for exactly this reason.
Watch three contract details on any PPA: the escalator compounding against your actual utility trajectory, the buyout schedule if you later want the asset, and end-of-term removal or renewal obligations. And a note from the deal table: everything in a commercial PPA is negotiable — the first term sheet is an opening position, not a market price. If you're weighing a specific offer, that review is exactly the kind of engagement the email list below connects to.
A power purchase agreement is a contract where a developer installs, owns, and maintains a solar system on your property, and you purchase the electricity it generates at a fixed contracted rate, typically for 15–25 years, with no upfront cost.
Ownership almost always produces lower 20-year cost if your business can monetize the 30% tax credit and depreciation, commonly by 30–50%. PPAs trade that value for zero capex, no operating risk, and no tax-appetite requirement.
1–3% per year is standard. The escalator compounds, so a 2.5% escalator roughly doubles the rate over 28 years — always model it against a realistic utility-rate escalation rather than assuming the spread stays constant.
Estimates are for planning and education, not engineering design or financial advice. Verify rates with your utility and confirm electrical work with a licensed engineer or electrician.
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