How does a solar PPA work in Texas?

A solar Power Purchase Agreement is a contract where a third party (the PPA provider) installs and owns solar panels on a homeowner's roof. The homeowner agrees to buy the energy those panels produce at a per-kWh rate set in the agreement, usually lower than what they were paying their retail electric provider plus Oncor delivery fees combined. No upfront cost, no lien on the home, no equipment purchase. The PPA provider keeps the federal tax credit and is responsible for maintenance.

The PPA contract specifies a per-kWh rate the homeowner pays for solar energy the system produces. Each month, the homeowner gets two bills:

1. From the PPA provider, for solar production at the agreed cents-per-kWh rate.
2. From the retail provider, for any energy still drawn from the grid (typically a much smaller bill than before).

Combined total is typically 30-70 percent lower than the pre-PPA bill. Many PPAs include a small annual escalator (1-3 percent per year is reasonable; 5+ is aggressive and starts to compound against you).

Most residential solar PPAs run 20-25 years. The homeowner can usually buy out the system at year 5, year 10, year 15, or end of term, with prices defined in the contract. The PPA provider handles all maintenance, monitoring, and warranty work for the system's lifetime. If the system stops producing, the PPA provider has to fix it or stop billing. That production risk sits entirely with the provider, which is why they have skin in the game on sizing and maintenance.

The PPA agreement transfers to the new homeowner. Most PPA providers have a smooth transfer process — the buyer signs a short transfer doc, the system continues under the same terms. Some buyers welcome it (lower bill + battery is a feature). A few resist (don't want a 20-year agreement). In the rare cases where the buyer refuses, most PPAs allow a buyout calculated using a formula in the contract. Ask any provider for the buyout schedule before signing.

The PPA provider, not the homeowner. The provider owns the equipment and claims the federal Residential Clean Energy Credit (Section 25D). The homeowner does not file for it. That credit is part of why the per-kWh rate the PPA provider can offer is lower than what a homeowner would self-finance to. If you want the tax credit personally, you need to BUY the system, not enter a PPA.

Closely related but technically different.

LEASE: fixed monthly payment regardless of how much energy the system produces. Production risk sits with the homeowner.
PPA: charges per kWh produced. Payment varies with sun, season, and system performance. Production risk sits with the provider (they only get paid for what's produced).

Most homeowners prefer PPAs for that reason. Texas providers offer both. Ask which model is being pitched.

Functionally, very little. A utility swap IS a per-kWh production agreement structurally similar to a PPA. The differences are framing and package:

- Gridhack's utility swap is specifically designed for Oncor-territory Texas homeowners.
- Battery storage included as standard (some PPAs charge extra for batteries).
- Frames the deal around the homeowner's day-to-day experience: same outlets, same usage, lower bill, backup power.

Most generic Texas solar PPAs are solar-only and don't include the battery.