Understanding Third-Party Ownership Financing Structures for Renewable Energy
Third-party financing is a well-established financing solution in the United States, having emerged in the solar industry as one of the most popular methods of solar financing. Third-party solar financing predominantly occurs in two forms: solar leases and power purchase agreements (PPAs). In the lease model, a customer signs a contract with an installer/developer and pays for the use of a solar system over a specified period of time, rather than paying for the power generated. In the PPA model, the solar energy system offsets the customer’s electric utility bill, and the developer sells the power generated to the customer at a fixed rate, typically lower than the local utility.
Below are resources to help you understand third-party ownership financing structures as a means to facilitate your solar project development.
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- Using Power Purchase Agreements for Solar Deployment at Universities (PDF) (4 pp, 1.1 MB)
- The National Renewable Energy Laboratory's fact sheet provides guidance to universities on the process of using PPAs and how PPAs can make economic sense for campus solar deployment. This document can support university stakeholders charged with the financial planning of campus solar projects.
- Solar Power Purchase Agreements
- A solar power purchase agreement (SPPA) is a financial arrangement in which a third-party developer owns, operates, and maintains the photovoltaic (PV) system, and a host customer agrees to site the system on its property and purchases the system's electric output from the solar services provider for a predetermined period. Explore this Green Power Partnership webpage to find out how SPPAs work, the benefits and challenges, and other useful information and resources.
- Solar Power Purchase Agreements: A Toolkit for Local Governments
- Designed to overcome the common challenges and costs associated with SPPAs, the Interstate Renewable Energy Council's comprehensive toolkit provides a full suite of legal resources and related documents in a user-friendly format.
- PV Development Considerations for U.S. Universities (PDF) (54 pp, 3 MB)
- This presentation facilitated through the Solar University Network outlines critical solar development considerations for colleges and universities. These include structuring solar development teams, best practices and rules of thumb for PV development, university financial options for PV investment, and best practices for PV procurement.
- Third Party Solar PV Power Purchase Agreement (PDF) (3 pp, 148K)
- This map of the United States shows which states and territories authorize the third-party PPAs for solar PV, which includes at least 28 states (plus Washington, D.C., and Puerto Rico). This map and information are provided as a public service and do not constitute legal advice.
- Solar Power Purchase Agreement
- This SPPA template document was developed by a group of solar developers, law firms, and other interested parties in the solar energy space. It represents a consensus around one possible approach to solar finance, with a particular emphasis on access to the broader capital markets. To use this content, you should review it in the context of your personal business strategy.