Solar Leases and Power Purchase Agreements Explained

What is the difference between a solar lease and a PPA?

A lease works like renting a car. A monthly amount buys the right to use the panels, whatever they produce. A power purchase agreement is closer to a utility bill. You pay a rate per unit of energy generated, so a poor production month costs less and a strong one costs more. Either way a company installs, owns and usually maintains the system. Availability varies by province and provider, and some regions have few offers, so ask what is actually sold where you live.

Who owns the system and who gets the incentives?

Ownership drives everything. The owner may claim any tax treatment or incentive tied to the equipment, and the household usually does not. That can make the monthly price lower than a cash purchase would suggest, or it can mean you give up benefits you would have had. Programmes change, so check the current terms with the Government of Canada energy-efficiency pages, your provincial energy ministry and your utility. The overview in the incentives guide explains the types of support, and the GST and HST guide covers sales tax questions.

Money flow with invented round numbers

Suppose, for illustration only, a lease costs 150 dollars a month with a yearly increase written in. Over fifteen years the total is easy to add up, and comparing it with a quote for buying the same system shows the premium for not owning. If a PPA instead charges per unit, compare that rate with your current electricity rate and ask whether it rises each year. Real prices vary by region and year, so only written quotes tell you. The method for comparing quotes is in the quote comparison guide.

Ask what happens if production falls short, who pays for repairs, and whether an inverter replacement is covered.

Risks to read in the contract

• Escalators: a built-in yearly increase can erase early savings.
• Term length: fifteen to twenty-five years outlasts many owners in a home.
• Transfer on sale: the buyer may have to take over the contract, as the selling guide explains.
• Roof access and repairs: who removes and reinstalls panels if the roof needs work.
• Liens or registrations against the property, if any.
• End of term: renewal, purchase or removal.

Have a lawyer look at the clauses that touch the title.

Is a lease or PPA right for you?

It can suit someone who wants no upfront cost and accepts less control. It tends to suit people poorly if they plan to move soon or want to claim incentives themselves. Compare with a loan or cash in the financing comparison. A business owner should also look at how a purchase is depreciated, because owning can open tax options that renting does not.

The community project covered in how Drake Landing worked was owned and operated as shared infrastructure, a reminder that the ownership model matters as much as the technology.

Questions to ask the salesperson

Contracts of this kind are long, and the sales conversation is short. Bring a list. Ask for the total amount payable over the full term in dollars, with and without the escalator. Ask what the monthly figure covers and what it does not, such as monitoring, panel cleaning, roof repairs and inverter replacement. Ask whether the company can sell the contract to another firm, and whether that changes any term. Ask for the cancellation rules during the cooling-off period set by your province, and for the removal terms if you cancel later.

Compare the answers with a written purchase quote for the same size of system. If the salesperson will not put a figure in writing, treat that as information.

Quick answers