While a power purchase agreement might be a good fit for you, depending on where you live, it may not be an option. Here's where PPAs are currently available.
So you want to go solar. With home energy prices going up pretty much across the board, the money you can save seems like a no-brainer.
But if you can't afford to buy and install solar panels, you could enter a power purchase agreement. A PPA allows you to reap some of the benefits of solar -- like lower energy prices -- but comes with its own set of pros and cons. But, because the energy policy around PPAs is determined and handled at the state level, they aren't available in every state.
Let's look closer at what exactly is a power purchase agreement, and which states have them available for homeowners.
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In a power purchase agreement, you sign up to have a third-party developer install, own and operate an energy system on your property. As the homeowner and customer, you buy the system's electric output for a set period, usually over a 15- to 20-year contract.
The major benefit of a PPA is that you get a steady, low-cost source of energy without footing any of the upfront costs for a solar system. Downsides include not being able to take advantage of any tax credits. Plus, you would save more on electricity over the time span of a PPA if you bought your home solar system instead.
Watch this: New Solar Shingles You May Not Even NoticeNot all states allow power purchase agreements. That's because each state has the power to decide how it manages its electric utilities. This means all states are a little bit different, Alison Bates, assistant professor in environmental studies at Colby College, told CNET.
"Because of the way our utilities are structured in the US, there's variation in how they're regulated," she said.
The number of states that allow PPAs is a moving target, as lawsuits and legislation change regulation. Even in states that allow PPAs, there may be restrictions that limit who's allowed to install them or what size they can be. It's a good idea to confirm for yourself whether PPAs are allowed in your area.
| State | PPAs available | State | PPAs available |
|---|---|---|---|
| Alabama | Nebraska | x | |
| Alaska | Nevada | x | |
| Arizona | x | New Hampshire | x |
| Arkansas | x | New Jersey | x |
| California | x | New Mexico | x |
| Colorado | x | New York | x |
| Connecticut | x | North Carolina | |
| Delaware | x | North Dakota | |
| Florida | Ohio | x | |
| Georgia | x | Oklahoma | |
| Hawaii | x | Oregon | x |
| Idaho | Pennsylvania | x | |
| Illinois | x | Puerto Rico | x |
| Indiana | Rhode Island | x | |
| Iowa | x | South Carolina | |
| Kansas | South Dakota | ||
| Kentucky | Tennessee | ||
| Louisiana | Texas | x | |
| Maine | x | Utah | x |
| Maryland | x | Vermont | x |
| Massachusetts | x | Virginia | x |
| Michigan | x | Washington | x |
| Minnesota | Washington, D.C. | x | |
| Mississippi | West Virginia | x | |
| Missouri | Wisconsin | ||
| Montana | x | Wyoming |
If your state doesn't allow for PPAs, you could reach out to your state government and advocate for more solar energy options. You can write a letter to your state energy office or organization stating why homeowners residing in your state could benefit from having the option of buying renewable energy through a PPA.
In some states, leasing solar panels may be an option where PPAs are not. Leases are very similar to PPAs, but differ in what you pay for. Instead of paying a set rate for the power solar panels generate, you pay a set fee for the solar panels.
If neither are an option, you can look into community solar, where you subscribe to an offsite solar farm, or start saving to buy solar panels.
Here are some of the pluses and minuses of PPAs.
While a PPA doesn't require you to foot the bill on upfront costs of installing, running, or maintaining a solar system in your home, whether or not it's worth it depends on your situation.
"Look at your goals for your energy system," Bates said. "If you really want to manage and control what's happening in your home, you might prefer to own your own system. If you're trying to immediately lower your utility bills and you don't have the upfront cash, then a PPA might be a better choice."
A PPA, or power purchase agreement, is an arrangement you have with a third-party developer to install a solar panel system on your property. They own the system and are responsible for running and maintaining it. You buy energy from them, which is usually less than the cost of what you would pay through your local utility.
It might be a good idea to buy solar panels if you want to boost the value of your home and save the most possible money. Renting solar panels through a PPA could be a better choice if you can't afford to foot the bill for upfront costs.
Article updated on September 16, 2023 at 5:00 AM PDT
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Jackie Lam is a contributor for CNET Money. A personal finance writer for over 8 years, she covers money management, insurance, investing, banking and personal stories. An AFC® accredited financial coach, she is passionate about helping freelance creatives design money systems on irregular income, gain greater awareness of their money narratives and overcome mental and emotional blocks. She is the 2022 recipient of Money Management International's Financial Literacy and Education in Communities (FLEC) Award and a two-time Plutus Awards nominee for Best Freelancer in Personal Finance Media. She lives in Los Angeles where she spends her free time swimming, drumming and daydreaming about stickers.
Eric Mack has been a CNET contributor since 2011. Eric and his family live 100% energy and water independent on his off-grid compound in the New Mexico desert. Eric uses his passion for writing about energy, renewables, science and climate to bring educational content to life on topics around the solar panel and deregulated energy industries. Eric helps consumers by demystifying solar, battery, renewable energy, energy choice concepts, and also reviews solar installers. Previously, Eric covered space, science, climate change and all things futuristic. His encrypted email for tips is ericcmack@protonmail.com.
