What Happens When My Commercial Solar PPA Ends?

When your solar PPA ends, the building stops buying your project's power, and you have to decide what happens next. Your PPA and site lease may dictate some of it, such as a buyout by the building owner or removal of the panels at your cost. Some of it may be left open. You can also sell the project before the end date, and the earlier you start, the more options you keep.

A solar PPA (power purchase agreement) is the contract under which the building buys your project's electricity at a set price for a set number of years, often 15 or 20. Many commercial projects built in the late 2000s and early 2010s are reaching that date now.

We hear about it most from owners who find out late. One broker told us about ten projects, each 15 years old, whose contracts left the end of the project's life as a "jump ball": it would be handed to the building owner, renewed, or removed at the end of the term. The owner didn't know the projects could be sold. Another owner wasn't sure whether the PPA could be repriced after year 15.

Four Things in Your Contract Decide Your Options

The start date, how long the PPA and the site lease each run, what happens at the end, and who controls the roof.

• ●The start date and the length of both contracts. Your PPA and your site lease (the agreement that lets the panels sit on the roof or land) are often separate, and they don't always run the same number of years or start on the same day. Count forward from each start date to find the real end dates.
• ●The notice period. Many PPAs require notice months ahead if either side wants to extend or end the contract. Miss it, and an option can lapse.
• ●What happens at the end of the term. Look for a renewal clause, a purchase option for the building owner, and a removal clause that says who pays to take the panels down and restore the roof. Purchase options are often set at "fair market value," which is harder to pin down than it sounds: the market for buying and selling older solar projects is still young, so there are few past sales to compare against. Read how your contract says that price gets set, and who sets it.
• ●Your right to stay on the roof or land. When the site lease ends, so does your right to keep the panels there.

Our post on questions to ask about a commercial solar contract covers what to look for when the paperwork is old or unclear.

Your Four Options

1. Sell the Project to Do Good Energy

Best when: you'd rather not negotiate with the building, pay for removal or keep running an aging project.

A project with years left on its PPA can be sold, and the buyer takes over the contract, the roof rights and the end-of-term decision. That's what we do. Do Good Energy buys aging commercial solar at any stage, including projects close to the end of their PPA.

We make it easy to sell:

• ●A number in 23 seconds. Our instant solar estimate asks six quick questions, with no paperwork and no commitment.
• ●A letter of intent right away. If the number looks good, you can sign a letter of intent on the spot.
• ●Missing paperwork is fine. Some sellers have everything and some have nothing. We've bought projects that changed hands three to five times.
• ●We handle the hard parts. Our legal team handles the paperwork, and we work out the next deal with the building owner.
• ●You walk away clean. We take over operations, maintenance, insurance and liability, and every contract that comes with the project.

Here's how selling to us works, step by step, and how buyers work out what an old commercial solar project is worth.

2. Extend or Reprice the PPA

Best when: the project runs well, the roof has years of life left, and the building still wants the power.

An extension keeps the project earning, usually at a new rate. The building has the stronger hand here, because it can often buy the system or ask for removal instead. Before you agree, check the roof. If it needs replacing in the next few years, you may pay to take the panels down and put them back up during the new term.

3. Sell the System to the Building Owner (a PPA Buyout)

Best when: the building owner wants the panels and your contract gives them a purchase option.

Many PPAs let the building owner buy the system at the end of the term. As above, the hard part is the price. If there's no purchase option, a sale to the building is still possible, but it's a negotiation, not a right.

4. Remove the Panels

Best when: nobody wants the project and your contract requires the roof to be cleared.

Removal is usually the most expensive way out. Many PPAs put the cost of taking the system down and restoring the roof on the system owner. Get a removal quote early, even if you plan to extend or sell, because it sets the floor for every other option.

The Incentives Often End Around the Same Time

Many projects reach the end of their PPA and their state incentive payments in the same few years.

In New Jersey, for example, SREC payments run for 10 or 15 years, so a 15-year PPA and a 15-year SREC term can end almost together. Losing both income streams at once changes the math on every option above. Our state-by-state solar guide covers the rules where your project is.

Don't Let the Date Pass Without a Plan

If the end date passes with nothing signed, you can be left with panels on a roof you no longer have a right to use or make money from.

Check what your contract says happens if neither side acts. Some contracts roll forward month to month. Others trigger the removal clause. Either way, the insurance, the roof and the power still need an owner. Start the conversation with the building owner, or with us, at least a year before the end date.

Get your 23-second estimate.