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Power Purchase Agreements And Selling Your Home

By Tabitha Jean Naylor

If you want to go solar but you don't have the money to invest in a full solar system for your home you can investigate the possibility of power purchase agreements. Power purchase agreements are not legal in all states but where they are legal they can be a terrific way to get solar power and save money at the same time.

There are several solar power installation companies that offer solar leases and power purchase agreements. These companies take advantage of federal and state energy rebates to install full solar roof systems on homes at no cost or very low costs. The installations remain on the house for a period of up to 20 or 25 year. During that time the company is responsible for the maintenance of the system. The homeowner's obligation is to buy power from the system on their roof at a price guaranteed to be lower than that of their electric utility provider during the course of the agreement. Generally, the price you pay will remain fixed over the term of the agreement. With electricity prices projected to continue to rise this can offer additional savings over the period of the agreement. For many people this is a win-win situation. Homeowners can benefit from solar power savings without any upfront costs. Of course, the homeowner will never own the system using a power purchase agreement although many companies offer a buyout option at the end of the agreement term. The other disadvantage is that the homeowner cannot take advantage of federal, state or local financial incentives.

Before you enter into a power purchase agreement you should verify with the dealer all issues relating to transferring the power purchase agreement to a new homeowner in the event you need to sell your home. Most agreements allow for the contract to be assumed by the new owner or bought out by the new owner. You need to know the specific details. If the system can only be bought out then you may be faced with a financing issue if the buyers cannot afford the additional cost of the solar installation.

Overall, power purchase agreements are a smart way to go solar and green your home. You are making your home more attractive in terms of utility costs and you are providing a more sustainable home for someone else by having the solar installed. It can also help you get a better price for you home and make your home standout from competitors.

It is important to do your due diligence before signing any contracts. Understand all the terms of the agreement and especially those things that apply to your situation if you will be selling your home. You don't want to get caught in a situation where you are unable to reassign the contract in the event you need to sell.

While PPAs are growing in Massachusetts, there are states where power purchase agreements are currently not allowed or where it is not currently financially viable for companies to provide power purchase agreements. Those states include Florida and South Carolina.

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