Financing

PPA cost calculator

Enter your usage, your starting PPA rate, and the escalator. See what you'll actually pay per kWh by the end of the contract, and the full cost over its term.

Your numbers

1 Project details Optional
Shown on your exported report. Leave blank to skip.
2 Your usage
Find this on a recent utility bill.
3 The PPA contract
Listed in your PPA proposal, usually $0.10 to $0.18.
4 Compare against your utility Optional
Leave blank to skip the utility comparison.
US residential electricity rates have risen close to 3% a year on average.

How it works

Three steps to your true PPA cost

Step 1

Pull the rate and escalator from your contract

The starting rate and annual escalator are both spelled out in the PPA proposal itself, not estimated. If you're comparing this against a lease offer, run the same numbers through the PPA vs lease comparison instead.

Step 2

Add your usage and contract length

Use a recent monthly average from your utility bill. Most PPAs run 20 or 25 years, and the length matters a lot since the escalator compounds every year it's in effect. The escalator rate calculator shows how much a single percentage point changes the total.

Step 3

Add your utility rate to see the real comparison

The utility fields are optional but worth filling in, since a PPA that looks cheap in year 1 can lose its advantage by year 15 if your utility's rate increase turns out to be slower than the PPA's escalator.

Understanding your PPA cost projection

Why the year 1 rate isn't the real story

A PPA's starting rate is usually set below your current utility rate, which is what makes it attractive to sign. But the escalator compounds every year, so a $0.14 starting rate with a 2.9% escalator reaches roughly $0.28 by year 25, twice the starting price. Read the escalator clause carefully before comparing a PPA quote to a lease quote, since the PPA escalator rate calculator isolates just that one number.

How a PPA differs from a lease

A lease charges a fixed or escalating flat monthly fee regardless of how much power the system produces, while a PPA charges by the kWh actually generated, closer to how a utility bills you. That means a PPA payment can be lower in a cloudy month and higher in a sunny one, while a lease payment stays the same. The PPA vs lease comparison walks through both structures side by side. The DOE's homeowner's guide to solar financing covers PPA structures in more general terms.

Whether the PPA still beats your utility by year 20

Because both the PPA rate and the utility rate typically rise every year, the real question is which one rises faster. Historically, US residential electricity rates have climbed close to 3% annually, which is roughly the same pace as a typical 2.9% PPA escalator. That means the savings a PPA offers in year 1 often persist through the contract, but a slow utility rate market can erode that gap over time. The utility rate increase sensitivity tool can help you test a range of utility rate assumptions against this same math.

What ownership would have saved instead

Because a PPA provider owns the system, you never build equity in the equipment, and any federal tax credit available to the provider through a separate commercial credit doesn't pass directly to you as a homeowner credit. Run the same usage numbers through the cash purchase vs financed payback comparison to see what buying outright or financing would cost over the same stretch of years, now that no residential credit applies to either path. The CFPB's issue spotlight on solar financing covers this ownership tradeoff in more depth.

What to check before signing

Confirm the exact escalator percentage, whether it's capped, and what happens at contract end: a renewal option, a buyout price, or removal of the system. The system buyout value calculator estimates what a buyout might cost partway through a PPA or lease term. The commercial PPA vs ownership tool covers a related decision if the system is for a business.

Questions

Frequently asked

Most residential PPAs start between $0.10 and $0.18 per kWh, usually 10% to 20% below the local utility rate, then rise with an annual escalator of around 2.9%. A home using 900 kWh a month starting at $0.14 per kWh under a 25-year PPA pays about $54,400 in total, compared to roughly $63,000 for the same usage at a utility rate rising 3% a year.

No. PPA contracts almost always include a fixed annual escalator written in at signing, so the per-kWh rate rises every year of the contract regardless of what utility rates or panel output actually do. A small number of PPAs offer a flat rate with no escalator, which is worth asking about directly.

No. Under a PPA, the solar company owns the equipment and you simply buy the electricity it produces at an agreed rate, similar to buying power from a utility but from panels on your own roof. You don't qualify for the federal tax credit yourself, though as of 2026 that credit no longer applies to a new owned system either, and maintenance is the PPA provider's responsibility.

A cash or loan purchase usually still saves more over 20 to 25 years because you avoid the PPA's escalator increases entirely, though the gap is smaller now that no federal tax credit applies to either a new owned system or, indirectly through the provider, a new PPA. A PPA requires no upfront cost and shifts maintenance risk to the provider. Compare both directly in the cash purchase vs financed payback tool.

Related tools

Keep comparing your financing options

PPA vs lease comparison PPA escalator rate calculator Solar loan vs lease comparison Cash purchase vs financed payback Third party owned vs owned system System buyout value over time Lease buyout cost calculator All financing tools