Solar PPAs for California homes: how they work and what to check

With a home solar power purchase agreement (PPA), a company owns the system on your roof and you buy the power it makes, at a price per kWh set in the contract that usually rises by a set percentage each year. Terms typically run 20 to 25 years, the provider maintains the system, and you still buy the rest of your power from your utility. Every contract must open with the Solar Energy System Disclosure Document, so read that page first.

How does a home solar PPA work?

In the words of the California Public Utilities Commission (CPUC), the solar provider owns the system on your property and sells you the electricity it generates. You typically pay for all the power the system produces, at the contract price per kWh, with little or nothing to pay upfront. You never own the equipment unless the contract lets you buy it.

Your utility account stays open. When the system produces more than the home uses, the surplus goes to the grid and earns export credits on your utility bill under net billing; in the evening and at night you buy from the utility as before. So you have two bills: one from the provider and a smaller one from the utility. You pay the PPA price for every kWh the system produces, including the surplus that goes to the grid and earns only the export credit, so under net billing the system should be sized to what the home actually uses. A lease is different: you pay a set monthly amount to rent the system, however much it produces.

How is the price set, and what does the escalator do?

The contract sets the price per kWh for the first year and the rule for changing it. Most home PPAs include an escalator, a yearly increase written into the contract. The CPUC says escalators are typically 1 to 3 percent a year and advises caution with anything higher.

An escalator compounds, so a small percentage grows over a long term. Compare the contract price in later years with what your utility is likely to charge, not just the first-year price. The table shows the arithmetic.

Illustrative arithmetic, not an offer or a forecast of utility prices. Year 1 equals 100 percent.

How long does it last, and who looks after the system?

A typical home PPA runs 20 to 25 years. In the CPUC’s comparison of ways to pay, the provider is responsible for all monitoring, maintenance and repairs under a lease or PPA. You are buying power, not looking after equipment.

Read how that responsibility is written. Ask what output the provider expects each year, how quickly faults are fixed, and who pays to remove and reinstall the system if the roof needs work during the term. Ask too what happens if you want to end early, and whether that means a balloon payment or an early termination fee.

What happens when you sell the house?

The agreement does not end when you move. The CPUC lists the usual options: the buyer agrees to take over the contract, you keep making the payments, or you buy out the agreement, which can be costly. Selling can be more complicated than with a system you own.

Before you sign, ask whether a buyer has to qualify, whether there are transfer fees, and how the buyout amount is worked out. Keep every document; the CPUC advises saving them for when you sell, replace the roof or need repairs.

What is the Solar Energy System Disclosure Document?

California law requires a standard disclosure, created by the Contractors State License Board (CSLB) with the CPUC, on the front or cover page of every residential solar contract, in bold 16-point type. It states the total cost, including financing and energy or power costs where they apply, how to file a complaint with the CSLB, and your right to cancel.

Supporting pages follow it. Their bill-savings estimate covers the 12 months after installation, should use your last 12 months of hourly usage, and assumes utility rates do not rise. Since November 1, 2025, PG&E, SCE and SDG&E have required the disclosure and its supporting pages with every residential interconnection application, alongside your signed copy of the CPUC’s Solar Consumer Protection Guide. The contract and the disclosure must be in the language mainly used in the sales presentation.

Is a PPA better than buying?

It depends on what you value. Buying gives you every kWh the system makes, but in 2026 there is no federal credit for buyers and the upkeep is yours. A PPA needs little upfront and leaves the upkeep with the provider, but you pay for the power for two decades or more, with the increases the contract sets. The owner of a PPA system may still claim a federal business credit if the system is in service by the end of 2027; home solar in California in 2026 has the dates.

Whichever you choose, check the company before the contract, as set out in how to choose a home solar company in California.

Is Aeternus offering a home PPA in California?

We are arranging one. Our California office opens on December 1, 2026, and a home solar PPA will follow once a provider is signed; we will not give a date before then. A financing partner would own the system, and you would pay for the power it makes at a price per kWh set in the contract, with any yearly increase written in from the start and the disclosure on the front page.

It is not available yet. If you would like us to contact you when it is, register your interest.

Questions

Do I pay anything upfront with a solar PPA?

Usually little or nothing; the CPUC lists little or no upfront cost as a feature of leases and PPAs. Some providers let you pay part upfront to lower the price per kWh, so ask whether that is possible and what it changes.

Can I cancel a PPA after signing?

Yes, within the legal window, if the contract was not negotiated at the company’s place of business: three business days after you receive a signed, dated copy, or five business days if you are 65 or older. Cancel in writing.

What if the system produces less than expected?

With a PPA you pay for the kWh the system delivers, so you buy more from the utility instead. Ask what yearly output the provider expects and what it commits to in writing if output falls short.

Can I buy the system before the contract ends?

Some contracts allow a buyout during or at the end of the term. Ask when it is possible, how the price is calculated, and what happens to maintenance and warranties afterward.

Do I get the federal tax credit with a PPA?

No. You do not own the system, and the homeowner credit ended with 2025 in any case. The company that owns it may claim the business credit, Section 48E, under the dates and sourcing rules of the 2025 law.

Sources

• CPUC: California Solar Consumer Protection Guide (leases and PPAs, escalators, selling your home, questions to ask): https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/demand-side-management/customer-generation/california-solar-consumer-protection-guide
• CPUC: California Solar Consumer Protection Guide, published October 2025 (PDF): https://www.cpuc.ca.gov/-/media/cpuc-website/divisions/energy-division/documents/solar-guide/2025-versions/solarguide25.pdf
• CSLB: Solar Energy System Disclosure requirements (front page, 16-point bold, language of the sales presentation): https://www.cslb.ca.gov/Consumers/Solar_Requirements.aspx
• California Business and Professions Code section 7169 (solar energy system disclosure document): https://california.public.law/codes/business_and_professions_code_section_7169
• CPUC: CSLB Disclosure Documents (supporting information document required from November 1, 2025): https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/demand-side-management/customer-generation/california-solar-consumer-protection-guide/cslb-disclosure-documents
• CPUC Resolution E-5364 (adopted March 13, 2025): inputs and assumptions for bill savings estimates in the CSLB Solar Energy System Disclosure Document: https://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M559/K800/559800004.PDF
• CSLB, California Licensed Contractor Newsletter, Summer 2026: reminder to solar contractors about disclosure documents: https://cslb.ca.gov/Resources/Newsletters/2026/CLC_Newsletter_Summer2026.pdf
• CSLB Industry Bulletin 20-22 (November 17, 2020): home improvement contract requirements for solar jobs: https://www2.cslb.ca.gov/Resources/IndustryBulletins/2020/20-22_solar_contracts.pdf
• CSLB: Solar Energy System Disclosure Document, five-day right to cancel version: https://www.cslb.ca.gov/Resources/Contractors/RightToCancel.Dec2020.Eng.pdf
• CPUC: Net Energy Metering and Net Billing (net billing tariff, export credits, nine-year legacy, required time-of-use rates): https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/demand-side-management/customer-generation/net-energy-metering-and-net-billing
• Grant Thornton: Energy incentives under OBBBA, what you need to know (25D termination, 48E for solar, leased residential property): https://www.grantthornton.com/insights/alerts/tax/2025/insights/energy-incentives-under-obbba-what-you-need-to-know
• IRS Notice 2025-42: Sections 45Y and 48E beginning of construction for wind and solar facilities: https://www.irs.gov/pub/irs-drop/n-25-42.pdf

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