I'm looking into solar, and first thing I'm /readinghearing is the 30% tax credit is going away Jan 1.

I got a quote from a company, and they have this 'loophole' to get the 30% discount off a system. Straight from the email;

How do you get the 30% discount?
We use a PPA partner, a third party investor, who provides short-term options for solar and battery systems through Prepaid Power Purchase Agreements (PPAs) and Energy Storage Services Agreements (ESSAs).

Upfront Benefit These agreements allow qualified property owners to indirectly access the benefits of the Federal Investment Tax Credit (ITC) upfront, even though the Third Party retains ownership initially. Aside from the system cost, the PPA has no monthly payments, no rate escalator, no change in the net metering program.

Ownership The PPA partner owns and maintains the system for the first six years, including monitoring, insurance, and production guarantees.

Transfer Option After six years, the PPA partner transfers ownership of the solar or battery system (and all warranties) to the property owner at no additional cost and no extra funds are owed by either party.



Original system price is ~$36k for a 13.5 kw system. so 30% off, then also a $3k discount for December, bringing total cost to ~$22k. I can pay full cost up front get a loan through them, or on my own, etc.

I will break even in 5-7 years. I use a lot of kwh (due to an electric swim spa that uses ~9mWh annually)

Wondering if this ppa thing is as easy as it sounds. Sales guy says it costs nothing, they just 'own' it for 6 years so they can depreciate it/get the credits, then it transfers to my name. My benefit is I get 30% off cost of system upfront.

I'm unsure about all the details of the transaction, however, $1.63/watt is a great price for residential solar.

What kind of panels? Warranty? Output guarantee (i.e. guaranteed to be 85% efficient in year 25/30?), are they name brand panels w/ a strong history (REC, QCell,..), where are they manufactured?

What about the inverter(s)? Micro/String? Warranty? Enphase Microinverters are probably still the best choice.

What about the racking system? IronRidge is very good

What type of roof penetration warranty? Should be at least 10 years. Do they do their own installs or do they outsource (2 Chucks and a truck??)

You just need to do your due diligence b/c unfortunately so many of these residential solar companies have gone out of business/bankruptcy so you need to know what happens in that scenario b/c your warranties are only as good as the companies backing them.

Also is the labor included in the warranties or just the products (are they going to charge you every time a truck rolls)? Also make sure you have plenty of life left on your roof, at least 10/15 years as it can get really expensive when a system has to be removed and reinstalled after a reroof.

Anything that is said by sales, verify in the contract. And finally you shouldn't have to pay anything until you have PTO (Permission to Operate) from the utility. Many times solar systems are installed but don't pass inspections and take months to get PTO and if you've already paid or started making payments it can get really frustrating..

Just a few things to consider off the top of my head.

Sounds like a good deal, however take your time and do your due diligence and make sure everything is in writing and check the company out online/BBB and don't just take someone's word for it and definitely don't feel rushed by some funny money discount creating a sense of urgency.

howdyags12! said:

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I'm unsure about all the details of the transaction, however, $1.63/watt is a great price for residential solar.

What kind of panels? Warranty? Output guarantee (i.e. guaranteed to be 85% efficient in year 25/30?), are they name brand panels w/ a strong history (REC, QCell,..), where are they manufactured?

What about the inverter(s)? Micro/String? Warranty? Enphase Microinverters are probably still the best choice.

What about the racking system? IronRidge is very good

What type of roof penetration warranty? Should be at least 10 years. Do they do their own installs or do they outsource (2 Chucks and a truck??)

You just need to do your due diligence b/c unfortunately so many of these residential solar companies have gone out of business/bankruptcy so you need to know what happens in that scenario b/c your warranties are only as good as the companies backing them.

Also is the labor included in the warranties or just the products (are they going to charge you every time a truck rolls)? Also make sure you have plenty of life left on your roof, at least 10/15 years as it can get really expensive when a system has to be removed and reinstalled after a reroof.

Anything that is said by sales, verify in the contract. And finally you shouldn't have to pay anything until you have PTO (Permission to Operate) from the utility. Many times solar systems are installed but don't pass inspections and take months to get PTO and if you've already paid or started making payments it can get really frustrating..

Just a few things to consider off the top of my head.

Sounds like a good deal, however take your time and do your due diligence and make sure everything is in writing and check the company out online/BBB and don't just take someone's word for it and definitely don't feel rushed by some funny money discount creating a sense of urgency.

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Panels are Hyundai 440s. Enphase IQ8m microinvertors, pegasus racking.
30 yr panel warranty, and 25 yr on inverters, racking and workmanship. 5 year production warranty.
Not sure on efficiency in later years. I'll ask.

They are offering no payments for 6 months, so maybe that's to allow time for PTO. Company is smart wave solar. On solarreviews.com they are 4.5 out of 200+ reviews.

Thanks for other thoughts, I've reached out to my sales guy with several questions/clarifications.

here is the panel's production claim

more info;
$500 for a critter guard. (I'll probably add this, homes near me have had bird infestations.)
System is installed by W-2 employees.
$150 trip charge for labor for warranty work.
If this company goes belly up, I still have equipment warranties. Just need to find another company for service.
Roof issues are covered under 25 year workmanship warranty.
~4 weeks after install for PTO.


I mainly was hoping someone could chime in on this PPA language. Is it cut and dry as I think it is or is there something hidden here?

What's the loophole? It still needs to be installed by 12/31/25 to get the ITC.

rme said:

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What's the loophole? It still needs to be installed by 12/31/25 to get the ITC.

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The loophole is that I'm entering into a 6 year PPA where some other company owns/maintains/insures this system and they are getting the depreciation/credit/etc.

In exchange for that, they will give me $10k off. After 6 years, for no fee or cost, they will transfer that title into my name (whether I actually have paid in full or not)

I intend to pay this off in less than 5 years. Hypothetically if I did, I still wouldn't 'own' it until end of year 6 and the transfer happens.

This same practice has been used apparently by companies when there isn't any ITC.

You should absolutely get an attorney to review the contract, this level of complexity can go sideways fast.

Potential problems:
- If you're paying the system cost upfront, it's basically a sale disguised as a PPA. IRS rule for PPAs is 6 years to avoid recapture of the ITC, but generally agent-principal PPAs have no transfer costs. I would be very wary of a third party verbally promising to transfer ownership at no exit costs. The depreciation is nice and all, but they will have real cash expenses related to accounting transactions and attorney contracts

- Understand you will not get to claim the ITC. You are in essence waiving the ITC in lieu of the discount.
What does the contract say about if the 3rd party goes bankrupt or sells the contract or does M&A? Who is going to own the giant infrastructure bolted to your real property?

- Do you depreciate your house for tax purposes? Adding solar would be a capital improvement, but you won't own the asset. Do you work from home and claim qualified business expenses? Solar can be depreciated as a home office expense, but you won't be able to do that while the 3rd party owns the panels and you'll need to speak to a tax attorney to know if they can be recapitalized upon transfer back to you. The ITC cuts annual depreciable value in half, so you'll need to know the expected book value at ownership

- Who owns the sales taxes? Do you pay the sales taxes? Does the 3rd party pay them and capitalize them? What does your state/county do with solar home improvements and deductions for property taxes? Some states tax solar as a separate improvement, if that's you who will be responsible for those taxes?

Quote:

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- Understand you will not get to claim the ITC. You are in essence waiving the ITC in lieu of the discount.

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Isn't this my only option since the ITC is going away 12/31/25?

I am told that is the point of having this PPA, to still get a big discount on a solar install even though ITC is going away in 2 weeks. Without this PPA, I would simply pay $11k more for my install, and get no ITC.

this is the 'sample' PPA contract he sent me
https://www.dropbox.com/scl/fi/7ki0j7r82srsp3siah6lf/PE-Customer-Agreement-20251014-1-1.pdf?rlkey=qdnns10jqcgywx7zt5jno24m2&dl=0

I don't see a loophole. If it's installed by 12/31/25, someone gets the ITC. The PPA seems like financial engineering by someone with a better calculator. If it's not installed by 12/31/25, there is no ITC (that's what Grok tells me for residential solar).

rme said:

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I don't see a loophole. If it's installed by 12/31/25, someone gets the ITC. The PPA seems like financial engineering by someone with a better calculator. If it's not installed by 12/31/25, there is no ITC (that's what Grok tells me for residential solar).

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You are correct; This will NOT be installed by 12/31, so I get no ITC regardless of what I do or how I pay, nor does any one get an ITC. That isn't the argument here.

But, in exchange for allowing another company to 'own' this system for 6 years, they will give me $11k off the system price. Clearly, there is an incentive for this company to own this system for 6 years, hence the discount.

Per my sales guy, it's because they are depreciating the asset (w/o an ITC of course.)

If the contract clearly states no fees to transfer back to you, and there isn't language about risks of the asset being resold out from under you upon bankruptcy or M&A, it seems ok for you.

The company is probably stacking their balance sheet to either chase funding or put themselves up for sale. Depreciation is tax advantageous if you have enough of it, and since you're footing the bill it's transparent to their P&L (or even slightly profitable)

62strat said:

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rme said:

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I don't see a loophole. If it's installed by 12/31/25, someone gets the ITC. The PPA seems like financial engineering by someone with a better calculator. If it's not installed by 12/31/25, there is no ITC (that's what Grok tells me for residential solar).

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You are correct; This will NOT be installed by 12/31, so I get no ITC regardless of what I do or how I pay, nor does any one get an ITC. That isn't the argument here.

But, in exchange for allowing another company to 'own' this system for 6 years, they will give me $11k off the system price. Clearly, there is an incentive for this company to own this system for 6 years, hence the discount.

Per my sales guy, it's because they are depreciating the asset (w/o an ITC of course.)

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Yes, depreciation is valuable. If the IRS sees the PPA party as the owner, that makes sense since you wouldn't depreciate your home. I'm not going to dig out my intermediate accounting book, but sounds like a financing (capital) lease.

rme said:

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62strat said:

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rme said:

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I don't see a loophole. If it's installed by 12/31/25, someone gets the ITC. The PPA seems like financial engineering by someone with a better calculator. If it's not installed by 12/31/25, there is no ITC (that's what Grok tells me for residential solar).

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You are correct; This will NOT be installed by 12/31, so I get no ITC regardless of what I do or how I pay, nor does any one get an ITC. That isn't the argument here.

But, in exchange for allowing another company to 'own' this system for 6 years, they will give me $11k off the system price. Clearly, there is an incentive for this company to own this system for 6 years, hence the discount.

Per my sales guy, it's because they are depreciating the asset (w/o an ITC of course.)

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Yes, depreciation is valuable. If the IRS sees the PPA party as the owner, that makes sense since you wouldn't depreciate your home. I'm not going to dig out my intermediate accounting book, but sounds like a financing (capital) lease.

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I guess it basically is, except it will transfer to me for zero dollars at lease end which is 6 years. I am told with no hesitation that when I pay this off, I absolutely own it for life and owe nothing else to anyone.

He said he would have this PPA contract written up in a week or so, so I'm not going to sign the main one until then.

How much is this 13.5kW solar system going to offset your total annual kWh? You mentioned 9,000kWh from a pool pump, what's your total annual kWh usage?

Is the home located in Texas? Regulated or deregulated electricity market?

If regulated, what's the utilities Net Energy Metering (NEM) plan? If deregulated, what retail electricity provider are you choosing and what's the plan details (how much is the REP going to buy your power back at per kWh when you send power back to the grid and how much are they going to charge you per kWh when you have to pull power)?

If in a regulated market, will you be grandfathered in if they decide to make changes to NEM plans?

howdyags12! said:

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How much is this 13.5kW solar system going to offset your total annual kWh? You mentioned 9,000kWh from a pool pump, what's your total annual kWh usage?

Is the home located in Texas? Regulated or deregulated electricity market?

If regulated, what's the utilities Net Energy Metering (NEM) plan? If deregulated, what retail electricity provider are you choosing and what's the plan details (how much is the REP going to buy your power back at per kWh when you send power back to the grid and how much are they going to charge you per kWh when you have to pull power)?

If in a regulated market, will you be grandfathered in if they decide to make changes to NEM plans?

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For previous 12 months I used 22MWh. This system is guaranteed to produce about 23MWh, so just over my use. (first winter with the swim spa, so it may vary some over the years)

This is Colorado, it's regulated. It's 1kwh to 1kwh net metering for my utility company; what ever I produce directly offsets what I use. If I overproduce, it is banked for me to use in future months. I will be under producing at first since installed in winter (when I use much more power to heat my pool), and then this summer I'll be overproducing and begin to stash away my bank. It will take a full year to balance out and for the most part get to no longer relying on utility company.

Still have a $20 min. bill, and then the demand charges which is highest 60 min use between like 6 and 8 for 30 days, and it's a steep $4.87/kwh. I average about 12 this year, so I need to work on that and try and reduce.

I am getting 30 panels because utility company restricts to 13.5kw system. If/when they raise or remove that restriction, I have room for a ~dozen more panels giving me ~40% more production if needed.