Quick definition
Sign a fixed-rate PPA, and the price you'll pay per kWh for the next 20 or 25 years is written into the contract from the start. A modest annual escalator, commonly 1 to 3%, is often included, but the entire rate schedule is known upfront, unlike an adjustable-rate PPA where the price can shift based on external factors.
A third-party provider still owns and maintains the panels; you're simply buying the power they generate at a predictable, agreed price.
At a glance: fixed-rate PPAs are one of two common PPA structures in the residential US solar market, valued for the predictability of knowing every year's rate in advance; the Solar Energy Industries Association notes third-party ownership models like PPAs have quickly become one of the most popular ways homeowners access solar.
Why it matters
The core appeal of a fixed-rate PPA is knowing exactly what you'll pay for solar power years in advance, without needing to track an external index or worry about a rate spiking unexpectedly. For homeowners who want solar without the upfront cost of buying a system, and who value predictability over squeezing out maximum long-term savings, a fixed-rate PPA offers a clear, contractually locked path.
That predictability comes at a real cost, though. Because a third party owns the system, they're pricing in their own return on investment, which generally means a fixed-rate PPA delivers less total savings over the full contract term than owning the same system outright, whether through cash purchase or a solar loan. The homeowner never builds equity in the equipment and doesn't benefit from federal or provincial tax incentives, since those go to the system's owner, not the electricity buyer.
Where a fixed-rate PPA makes the most sense is for someone who genuinely can't or doesn't want to finance a purchase, values zero maintenance responsibility, and is comfortable trading some long-term savings for simplicity and predictability. For someone focused purely on maximizing 20-year savings, ownership generally wins out over a PPA of any kind. DSIRE's database of state incentives and policies lists the state rules that decide where a PPA can even be offered, since some states restrict third-party ownership. For the numbers behind Fixed-rate PPA, the sales tax exemption savings calculator in our Rebates & Incentives section walks through the calculation step by step.
Where you'll see this
The PPA cost calculator projects your total payments over a fixed-rate PPA's full term based on your specific rate and escalator.
Before signing, the cash purchase vs financed payback comparison tool shows how ownership stacks up financially against paying for power under a PPA instead.
This term comes up in most residential solar sales proposals, in third-party ownership contracts, and any comparison between owning a system versus paying for its output over time, a comparison the savings comparison: loan vs PPA tool runs side by side using your actual numbers.
Related terms
Frequently asked
No. In any PPA, fixed-rate or otherwise, a third party owns the solar equipment on your roof. You're buying the electricity it produces at an agreed price, not the physical system, which stays with the PPA provider for the contract term.
Not usually, over the long run. A PPA typically offers lower upfront cost and no maintenance responsibility, but ownership, whether cash purchase or a solar loan, generally delivers more total savings over 20 to 25 years since you eventually own the asset and stop paying for the power entirely.
Contracts typically offer a few options: renew the PPA at a new rate, have the provider remove the system, or purchase the system outright at its then-current fair market or depreciated value. The specific options and pricing are usually spelled out in the original contract.
Many PPA contracts include a buyout option, letting you purchase the system before the contract term ends, often at specific years with a defined price. Terms vary by provider, so this is worth checking in the contract before signing rather than assuming it's available.