PPAs are offered by financing providers such as SunPower, Spruce, SunRun, Sunnova and One Roof Energy as a way for homeowners to enjoy the benefits of going solar, without having to worry about the upfront cost, or the operations and maintenance issues associated with solar ownership.
The PPA provider agrees to pay a specific rate for each kilowatt hour that the homeowner's solar project generates. Since in a PPA the homeowner does not own the system, the input parameters are limited. Here is how to model it:
- Go to your account Settings. Click on Financing Templates then Create New Template. Give your template a descriptive name that you will later be able to understand.
- In the Basic Information section, click on PPA.
- Click on the pencil icon to input your 'Project Useful Life' and your Discount Rate (we chose 25 years and 3.0%).
- Input your Degradation Factor (we chose 0.5%).
- Input the PPA Upfront Payment (we chose $5,000).
- Input your PPA Price (we chose $.18/kWh)
- Input your escalation rate (we chose 2.9%).
- Lock your immutable fields.
We highly recommend that you lock fields that will not change between different designs. This will save your team time and reduce errors.
To learn more about modeling PPAs please review this video: Creating PPA and Lease Financing Options.