What is a solar power purchase agreement?

Solar power purchase agreements (SPPA) are contracts between the electricity seller and a solar installation company that allows the electricity seller to sell electricity to a third party (e.g. solar panel installer).

These are generally defined as “assigned agreements” which means that they allow the electricity seller to do nothing in return for the electricity generated by the solar panel.

The solar panel installer is the “payment service provider” and receives the money generated from the sale of the electricity that is currently not being used to generate electricity itself. The solar panel installation company buys all the electricity they produce at a fixed rate.


The agreements allow people to use solar equipment with a small upfront cost, increasing the likelihood of purchasing solar equipment when you want to deploy it. The contracts generally require minimal down payments or are tied to specific contract terms. Also, these agreements can be highly beneficial for small businesses and individuals that do not want to pay hundreds of dollars to install a system.

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