Understanding PPA vs. ownership for your business
Why ownership usually wins the total cost comparison
For most taxable businesses, ownership wins by a wide margin once the ITC and bonus depreciation are counted. On a $240,000 system with a $5,000 rebate, owning costs about $130,000 over 10 years including O&M, versus about $212,366 for a PPA at $0.09 per kWh with 2% annual escalation, an $82,366 advantage for ownership. The tax benefits alone often cover more than half the system's upfront cost, which a PPA rate can't fully replicate no matter how competitive it is. Before you lock in a number, compare it with PPA vs. lease comparison. A size estimate is only half the decision for a business. The loan payment calculator in our Financing section can help you work out which way to pay for the system costs less.
Why the ownership advantage is bigger here than for a nonprofit
A taxable business gets both the ITC and MACRS depreciation tax savings, while a tax-exempt entity using direct pay only gets the ITC, since depreciation has no value against a tax bill that doesn't exist. That extra depreciation benefit is what widens the ownership advantage for a for-profit business compared to a nonprofit running the same numbers. Check the MACRS depreciation calculator to see that piece broken out on its own. Run the same inputs through loan term comparison tool to cross-check this figure.
When a PPA still makes sense
A PPA can make sense if you want zero upfront cost, don't have enough tax liability to use the ITC and depreciation efficiently, or want the developer to handle all maintenance and performance risk. The old off-balance-sheet argument for a PPA is weaker than it used to be, since a PPA can itself qualify as an embedded lease under the Financial Accounting Standards Board's Topic 842 lease accounting standard if you control the system's output and the developer can't substitute a different array, in which case it lands on your balance sheet the same as a loan would. If cash flow is the constraint rather than total cost, check the loan vs. cash comparison for a middle path that still lets you claim the tax benefits.
Who actually claims the tax benefits in each structure
The developer or a third-party investor owns the system in a PPA and claims the ITC and depreciation themselves, which is part of how they're able to offer you a below-market electricity rate. You never touch those tax benefits directly, they're built into the rate you're quoted. Run the payback calculator next if you decide ownership is the right path for your business, the ITC calculator to see exactly what you'd be claiming, or the loan term comparison tool in our financing section if a loan is the ownership path you're leaning toward, and the PPA vs. lease comparison if a lease is the third-party structure you're weighing instead. The Department of Energy's guide to going solar covers these ownership and financing tradeoffs at a more general level.