Home
In a power purchase agreement (PPA), a third-party finances and owns the solar installation and receives the available tax advantages and other incentives. The third-party then leases the system or sells the generated electricity to the building or site owner through a long-term contract. Several states are considering regulatory changes that would define third-party owners of solar equipment as utilities (the PPA model), according to the most recent report on Solar Market Trends Report by IREC. These regulations are generally unfavorable to the solar PPA model. If such rulings are made, third-party owners in these states may still be able to lease solar facilities (as opposed to owning and operating solar facilities) without being classified as utilities, but their ability to use the federal investment tax credit (ITC) will need to be clarified. If the federal ITC cannot be used as readily under the leasing model, PPAs will become less viable in these states.
