Solar PPA Calculator
Enter your PPA rate, escalator, and utility rate to see the full 25-year cost comparison. Find out if a Power Purchase Agreement saves you money — or if buying outright is the smarter choice.
| Yr | PPA ¢ | Util ¢ | PPA $ | Grid $ | Own $ | Cum PPA | Cum Grid |
|---|---|---|---|---|---|---|---|
| 1 | 12.0 | 14.0 | $1,320 | $1,540 | $120 | $1,320 | $1,540 |
| 2 | 12.3 | 14.5 | $1,351 | $1,586 | $120 | $2,671 | $3,126 |
| 3 | 12.7 | 15.0 | $1,384 | $1,633 | $120 | $4,055 | $4,759 |
| 4 | 13.1 | 15.5 | $1,417 | $1,682 | $120 | $5,472 | $6,441 |
| 5 | 13.5 | 16.1 | $1,451 | $1,732 | $120 | $6,922 | $8,173 |
| 6 | 13.8 | 16.6 | $1,485 | $1,784 | $120 | $8,408 | $9,957 |
| 7 | 14.2 | 17.2 | $1,521 | $1,837 | $120 | $9,928 | $11,794 |
| 8 | 14.7 | 17.8 | $1,557 | $1,892 | $120 | $11,485 | $13,686 |
| 9 | 15.1 | 18.4 | $1,594 | $1,948 | $120 | $13,079 | $15,634 |
| 10 | 15.5 | 19.1 | $1,632 | $2,006 | $120 | $14,711 | $17,640 |
How to Use This Calculator
Enter your PPA rate and escalator
Your PPA agreement specifies two key numbers: the Year 1 rate in cents per kWh, and the annual escalator (also called the "step rate"). The escalator is the trap to watch — a 2.9% escalator sounds small but compounds significantly over 20 years. A 12¢/kWh Year 1 rate with 2.9% escalator becomes:
- Year 5: 13.8¢/kWh
- Year 10: 15.9¢/kWh
- Year 15: 18.4¢/kWh
- Year 20: 21.2¢/kWh
If your utility rate escalates slower than your PPA rate, the PPA can end up more expensive than just buying from the grid. This calculator shows exactly when (if ever) that crossover happens.
Enter estimated annual production
This is in your PPA proposal document — the provider's estimate of how many kWh the system will produce in Year 1. This determines your total annual PPA bill: PPA rate × kWh produced. If production is lower than estimated (shading, cloudy years), you pay less but also produce less energy to offset your bill.
Enter the buy outright cost
This is what you'd pay to own the same system after the 30% federal tax credit. Most residential systems cost $20,000–$40,000 after the ITC. The calculator adds $15/kW/year in maintenance and shows the total 25-year owning cost versus PPA cost — often the most revealing comparison.
The Formula
Solar panel degradation at 0.5%/year means Year 20 production is about 90.5% of Year 1. This slightly reduces both PPA cost and utility cost savings each year. The buy-outright analysis assumes you own the system for 25 years — the same panels, minimal maintenance.
After the PPA contract ends (e.g., year 20), the calculator assumes you purchase equivalent electricity from the grid at the prevailing utility rate. In practice, you'd likely renew the PPA at a new rate, buy out the system, or have panels removed. The "after term" row is highlighted to clarify this.
Example
Standard PPA: 12¢/kWh, 2.9% escalator, 20-year term
A homeowner signs a PPA for an 8 kW system producing 11,000 kWh/year. Their current utility rate is 14¢/kWh with a 3.5% historical escalator. Buy outright cost (after ITC): $22,000.
Year 15 — where things get interesting
25-year totals
Verdict: Buy instead. Owning outright saves $26,000 more than the PPA over 25 years. However, the PPA still saves $15,000 vs grid-only. If the homeowner can't afford $22,000 upfront and doesn't qualify for a solar loan, the PPA provides meaningful savings with no capital required.