What is a Solar Power Purchase Agreement?

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A Solar Power Purchase Agreement (SPPA) is a contract in which a third party developer (“the provider”) owns, operates and maintains the solar PV system, and the host customer agrees to site the system on its property, usually on its roof, and purchases the system's electrical output from the provider for a predetermined period and cost. This financial arrangement allows the host customer to receive stable, and sometimes lower-cost electricity, while avoiding the up-front capital cost, with its complex permitting and design process, as well as system performance risk.
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SPPA’s can be cash flow positive for the host customer from the day the system is commissioned. The host customer buys the services produced by the solar PV system and not the solar PV system itself. The provider acquires valuable financial benefits such as tax credits and income generated from the sale of electricity to the host customer. For more information, go to this website.(http://www.epa.gov/greenpower/buygp/solarpower.htm)

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