California families know the feeling all too well. You open your utility bill, and the number is higher than last month. Again. With electricity rates climbing year after year, there's no telling what next month will bring.  A solar Power Purchase Agreement (PPA) takes the mystery out of it. You lock in a predictable rate for the energy your roof produces, pay nothing upfront, and a third-party owner (TPO) takes care of the equipment so you don’t have to. In a market where rates swing and policies shift, PPAs offer something rare: predictability.

What Is a Solar PPA?

You might have heard terms like “solar lease” or “Energy Service Agreement (ESA)”. In California, these are typically structured as PPAs, and for homeowners, they work essentially the same way. For the purposes of this blog, we'll focus on zero-down, monthly PPAs.

A solar Power Purchase Agreement is an arrangement in which a third party installs, owns, and maintains solar panels on your home. You don't buy the system; instead, you purchase the electricity it generates at a set rate per kilowatt-hour.

Here's what that means in practice:

• Panels installed and owned by TPO – You don’t own the equipment 
• Pay only for power produced – Your bill is based on actual energy generation, measured in kilowatt-hours
• Zero upfront investment – No large down payment required
• Full maintenance included – The TPO handles monitoring, performance, and repairs
• Stable, predictable rates – Your cost per kilowatt-hour stays locked in

Bottom line: with a monthly PPA you pay for the power your system produces at a predictable per-kWh rate. You don't own the panels or claim tax credits, but you avoid the massive upfront cost and all maintenance responsibilities.

If you’re comparing options, start with this question: do you want to own equipment, or would you rather pay for power at a predictable price and let a TPO handle the rest?

Understanding Typical PPA Contract Terms 

A solar PPA contract is designed to give you predictable, lower electricity bills, but it's important to know what you're getting into before you sign anything. While specific terms will vary contract to contract, here is what most California homeowners will see in a zero‑down monthly PPA with a third‑party owner (TPO):

• Contract Length: Most terms run 20 to 25 years. Longer terms may come with a lower starting rate.
• Energy Rate: Your price per kilowatt‑hour (kWh) for solar production. This is the number to compare against your utility rate.
• Production Guarantee: Most contracts promise your system will produce at least 85-90% of projected output and will typically compensate if it falls short. 
• Maintenance & Monitoring: The TPO monitors performance and covers repairs related to the system at no cost to you. 
• Batteries: Some contracts include storage and other equipment. Others price these separately.
• Annual Adjustment: Many PPAs include a small yearly increase known as an escalator clause. Details below.
  
  
  

The 20 to 25 year timeframe might seem long, but it makes sense when you consider that solar panels last 25 to 30 years. The extended term allows the TPO to cover installation, maintenance, and operational costs while still offering you competitive rates. Longer contracts often come with lower starting rates since costs can be spread across more years. If your situation changes, most agreements include buyout windows and straightforward transfer options. As you review these terms, ask yourself: does this PPA rate beat my utility's projected increases? If yes, the long commitment usually makes sense.

Rate Escalators and How Your Costs Change Over Time

One term you'll see in PPA contracts is the “escalator clause.” This is a small yearly increase in your PPA rate, typically ranging from 0% to 4%. This means your cost per kilowatt-hour increases slightly each year according to a predetermined schedule.

Escalator clauses are not as scary as they sound. They are designed to follow the trend of utility companies raising their rates. They function as inflation protection built into the contract for the TPO. However, escalator rates are almost always lower than the rate at which utility prices climb. Think of it this way: utility rates might increase 3-5% annually, while your PPA escalator might be 2%. You're still saving money compared to grid electricity, and that gap typically widens over time.

Buyout and Transfer Options

Life changes, and good PPA contracts account for that with flexible options. If you decide to sell your home, that doesn't mean you're stuck with a solar contract for a house you don't live in. Most contracts include paths to buy the system or transfer the agreement to a new homeowner.

If You Want to Buy the System

Most PPAs let you buy the system at different points. You can typically buy it out starting around year 6 or 7 at fair market value. Some contracts offer additional windows around years 10-15. At the end of your contract, the buyout price is usually minimal or zero since the system has been in use for decades.

If You're Selling Your Home

Transferring your PPA to a new homeowner is straightforward. The buyer takes over your agreement at the same rate, and TPO providers have made the paperwork simple. PPAs are appealing to buyers because they get lower energy bills right away without spending anything upfront. The transfer process is well-established, and most sales with PPAs go through without issues. In some cases, sellers choose to buy out their PPA before listing the home, then sell the property with a fully owned solar system. This can increase the home's value, though you'll need to weigh the buyout cost against the potential return.

Why PPAs Are More Attractive Now Than Ever

California's electricity rates have been climbing faster than anywhere else in the country. Depending on which utility company serves your home, your rates may have jumped anywhere from 25% to over 100% in the past decade alone, according to the California Public Advocates Office. For families trying to budget month to month, that unpredictability is exhausting.

How can you plan when you can't tell what your electricity will cost next year, much less five or ten years from now? Locking in a set rate with a solar PPA gives you stability. And there's another shift happening that makes PPAs even more valuable right now.

The federal solar tax credit for homeowners is ending this year (December 31, 2025), eliminating the 30% residential credit that has been available for nearly two decades. While the residential tax credit may be gone, the commercial solar tax credit is still available. PPAs let homeowners tap into those savings. This way, TPO claims the tax credit and passes the savings to you through lower rates. You get the benefit without worrying about tax paperwork or qualifying requirements.

All the Advantages, None of the Headaches

No Upfront Cost

Unlike purchasing panels outright, which can cost between $20,000 and $40,000, a zero-down PPA doesn’t require an upfront investment. There's no need for a solar loan with monthly payments and interest charges. This makes solar accessible to homeowners who can't or don't want to tie up that much capital. You start saving from day one without any money down.

Won't Impact Your Debt-to-Income Ratio

Unlike a solar loan, a PPA doesn't affect your borrowing capacity or debt-to-income ratio. It's treated like a utility bill rather than debt, which can be particularly valuable if you're planning other major purchases or refinancing.

Hassle-Free Maintenance

The TPO handles everything: installation, monitoring, and repairs. If something goes wrong, it's their responsibility to fix it. This saves you significant time and money over the life of the system. No repair bills. No monitoring fees. No hassle.

Common Myths About Solar PPAs

PPAs can seem confusing at first, especially with all the contradictory information floating around. Maybe you've heard they're difficult to transfer when selling your home, or that you're locked into a contract with no way out. Some of these concerns come from outdated information, while others simply aren't true. Let's clear up the most common misconceptions.

Myth: It’s hard to sell your house with a PPA 

Reality: Transferring a PPA is straightforward. The buyer takes over your agreement at the same rate, and most TPO providers have simplified the paperwork to make transfers smooth and quick.

Myth: You're stuck forever

Reality: Most PPAs include multiple exit options. You can buy out the system as early as year 6 or 7, transfer it when you sell your home, or choose from several options at the end of your term.

Myth: PPAs are the same as solar leases

Reality: They're similar but not identical. PPAs charge you based on actual power production, while leases charge a fixed monthly payment regardless of how much energy your system generates. 

Myth: PPAs are always more expensive long-term

Reality: It depends on your situation, local utility rates, and contract terms. Most homeowners start saving immediately, and even with a small annual escalator, their locked-in PPA rate stays well below rising utility costs year after year.

Myth: All PPAs are the same 

Reality: Contract terms vary significantly between providers. Rates, escalators, production guarantees, and buyout options all differ. Comparing multiple offers helps you find the best fit for your situation.

Questions to Ask Before Signing

The right questions can help you spot great deals, avoid problematic contracts, and choose the option that is best for you. 

Here’s a quick checklist to ask your provider: 

• What is the starting price per kWh?
• Is there an escalator, and how much is it?
• What happens if the system underperforms?
• What if my roof needs repairs during the term?
• Is there a buyout or early termination option?
• What happens at the end of the contract?
• How does the transfer process work if I sell my home?

At Citadel, we’re here to answer your questions and walk you through each option so you can feel confident in your decision. Our team makes contracts easier to understand and helps you choose the path that best fits your home and family.

Ready to Lock In Your Savings? 

Solar PPAs are quickly becoming one of the best options for California homeowners who want to save on their monthly electricity bill. But it is important to understand what you're signing. At Citadel Roofing & Solar, we've spent over 30 years helping homeowners make confident energy decisions. Our team takes the time to explain your options, answer your questions, and make sure the fine print never gets in the way of your savings. When you go solar with Citadel, there are no surprises, just clear information and a solar plan that works for your family. With us, the fine print never gets in the way of your savings.

Curious what a PPA would look like for your home? Start with a quick conversation. We’ll run the numbers, explain the terms in plain English, and help you compare options side by side.