Power Purchase Agreements (PPA) Explained: A Guide for Building Owners
What is a solar PPA? Plain-English guide for commercial building owners on power purchase agreements, key terms, and risk-free solar hosting.
Key Takeaways
A PPA is a long-term contract: developer installs solar, you buy the electricity at a discounted rate.
Zero upfront investment — the developer funds everything.
Locked-in tariff of ₹10–12/unit vs ₹18–20 grid rate for the full 15-year term.
Developer handles all maintenance, repairs, and performance guarantees.
If the plant underperforms, compensation mechanisms protect you.
What Is a Power Purchase Agreement?
A PPA is a contract between a power producer (solar developer) and consumer (building owner). The developer installs and maintains a solar plant on your property. You buy the electricity at a pre-agreed rate, cheaper than grid. You don't buy the panels — you buy the power.
Key Terms to Understand
Tariff: ₹10–12/unit vs grid ₹18–20. May include small annual escalation (1–3%).
Term: 15–25 years, matching panel lifespan. PowerNetPro standard: 15 years.
Performance guarantee: Minimum 85% of estimated annual generation.
Deemed generation: If you damage the plant, billing continues at estimated levels until repairs.
Maintenance: 100% developer's responsibility — cleaning, repairs, replacements.
Metering: Monthly joint readings. Annual calibration at developer's cost.
Damage liability: Host damage = host pays. Developer fault = developer pays. Joint inspection resolves disputes.
Why PPAs Protect Building Owners
| Protection | How It Works |
|---|---|
| Financial risk | Zero upfront investment |
| Performance risk | 85% generation guarantee |
| Maintenance risk | Fully developer's responsibility |
| Price risk | Locked-in tariff for 15 years |
| Technology risk | Developer handles all equipment issues |
What to Check Before Signing
Verify: clear tariff and escalation formula, performance guarantee percentage, maintenance cost ownership, damage liability framework, early termination conditions, and end-of-term equipment disposition.
Get a no-commitment PPA proposal. Contact PowerNetPro →