Solar PPA vs Purchase Calculator

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Table of contents

• How to use
• Common mistakes
• Definitions
• Methodology
• Limitations & assumptions
• Sources

Solar PPA: A solar power purchase agreement where another company owns the system and you pay for the electricity it produces [2].

Year 1 solar production: The estimated electricity the system makes in its first full year, measured in kWh.

PPA starting price: The starting price you pay for each kWh made by the PPA system.

PPA yearly price increase: The percent increase applied to the PPA price each year.

System purchase price before credits: The installed cash price before tax credits, rebates, or other incentives are subtracted.

Federal tax credit for buying: The percent of the purchase price the calculator subtracts as a simple credit estimate. It does not check eligibility.

PPA exit or transfer cost if you move early: The user-entered cost added to the PPA path when your stay is shorter than the PPA contract length.

Purchase minus PPA cost through your stay: The signed cost gap. Negative means buying costs less; positive means the PPA costs less.

First move year when buying costs less: The earliest whole year in the contract when the purchase path is equal to or cheaper than the PPA path.

Mistake: Entering your whole monthly electric bill in Current utility power price.
Fix: Enter the energy price in $ per kWh, such as 0.18, not the total bill.

Mistake: Using lifetime solar output for Year 1 solar production.
Fix: Enter the first full-year kWh estimate from the proposal, such as 10000.

Mistake: Putting the after-credit price in System purchase price before credits while also using Federal tax credit for buying.
Fix: Use the before-credit purchase price, or set Federal tax credit for buying to 0 if your quote already subtracted it.

Mistake: Leaving PPA yearly price increase at the default when the contract has a different escalator.
Fix: Enter the exact contract percent, or enter 0 if the PPA price stays flat.

Mistake: Ignoring PPA exit or transfer cost if you move early.
Fix: Enter the fee, buyout estimate, or transfer cost you want included, and set Years you expect to keep the home to your likely stay.

Mistake: Setting Years you expect to keep the home longer than PPA contract length.
Fix: Lower Years you expect to keep the home or raise PPA contract length so the comparison stays inside the contract term.

• This is an annual cost model, not an hourly utility bill model. It does not model time-of-use rates, demand charges, export credits, or detailed net metering rules.
• Estimated utility cost for the same solar kWh assumes each solar kWh replaces utility power at the entered Current utility power price.
• The purchase path does not include loan interest, inverter replacement, roof work, insurance changes, home resale value, or tax timing.
• Federal tax credit for buying is an editable percent input. Actual eligibility and tax use can differ from the simple subtraction shown here.
• PPA exit or transfer cost if you move early is not guessed. Use the contract or seller quote if you want that cost included.
• The comparison uses whole years, and Years you expect to keep the home must be no longer than PPA contract length.
• Production drop, PPA yearly price increase, and Utility yearly price increase are simplified steady yearly percentages.

Cost paths

The calculator treats a solar PPA as a contract where the homeowner pays for solar electricity instead of owning the system [2]. It totals one whole year at a time from year 1 through Years you expect to keep the home. Percent inputs are divided by 100 before use.

production_y = Year 1 solar production * (1 - Solar production drop each year / 100)^(y - 1)

ppa_price_y = PPA starting price * (1 + PPA yearly price increase / 100)^(y - 1)

PPA cost through your stay = sum(production_y * ppa_price_y) + early_exit_cost

early_exit_cost = PPA exit or transfer cost if you move early when Years you expect to keep the home < PPA contract length, otherwise 0

Buying path

The purchase path starts with System purchase price before credits, subtracts the entered credit and rebate, then adds owner maintenance for each year.

federal_credit_amount = System purchase price before credits * Federal tax credit for buying / 100

Purchase cost through your stay = System purchase price before credits - federal_credit_amount - Other upfront rebate + Yearly owner maintenance cost * Years you expect to keep the home

The purchase result is not floored at zero. If credits and rebates are larger than the purchase price, the signed value is shown so you can spot the input issue.

Comparison outputs

Purchase minus PPA cost through your stay = Purchase cost through your stay - PPA cost through your stay

A negative gap means buying costs less through the stay length. A positive gap means the PPA costs less through the stay length.

Estimated utility cost for the same solar kWh = sum(production_y * Current utility power price * (1 + Utility yearly price increase / 100)^(y - 1))

PPA savings versus utility power = Estimated utility cost for the same solar kWh - PPA cost through your stay

Purchase savings versus utility power = Estimated utility cost for the same solar kWh - Purchase cost through your stay

First move year when buying costs less = first whole year y where purchase_cost_y <= ppa_cost_y

The break-even check repeats the same cost formulas for each whole year from 1 through PPA contract length. If no year qualifies, the calculator shows that buying does not become cheaper within the contract.

Mini-example

Using 10000 kWh, $0.18 per kWh utility power, $0.12 per kWh PPA price, a $25000 purchase price, 25 stay years, a 2.5% PPA yearly increase, a 3% utility yearly increase, a 30% federal tax credit, $0 rebate, $200 yearly maintenance, and a 0.5% production drop, the PPA cost is about $38375 and the purchase cost is about $22500. Purchase minus PPA cost is about -$15875, so buying is cheaper in this simplified 25-year case. The first whole move year when buying costs less is year 15.