Solar PPA and pay-as-you-go solar in Perth: what to know before signing

A Power Purchase Agreement (PPA) or solar lease allows a Perth household to have solar panels installed for no upfront cost. Instead of buying the system, you pay for the electricity it generates at an agreed rate — typically lower than your grid rate but locked in for 10–25 years.

This can seem attractive compared to a $7,000–$10,000 upfront purchase. The trade-offs are real, however, and worth understanding before signing.

How a solar PPA works

The arrangement:

1. A solar finance company installs panels on your roof at no cost to you
2. The company owns the system
3. You pay for the solar electricity at an agreed rate (e.g. 20c/kWh)
4. Any electricity you don't consume from the solar system is still purchased from Synergy
5. Feed-in export credits (DEBS) typically go to the PPA company, not you

The PPA company's economics: They pay for the system upfront, earn DEBS export revenue, earn the STC rebate at installation, and receive your ongoing electricity payments. They profit from the combination of these revenue streams over the contract term.

PPA vs system ownership comparison

| Factor | Owning the system | PPA/lease | |---|---|---| | Upfront cost | $7,000–$10,000 | $0 | | Rate you pay for solar electricity | Free (after payback) | Locked-in rate (e.g. 20c/kWh) | | DEBS export credits | Yours | PPA company's | | STC rebate | Reduces your purchase price | Goes to PPA company | | System ownership | You | PPA company | | Maintenance responsibility | Generally yours | Often PPA company's | | Property sale | System stays | Contract must be transferred or bought out | | End of contract | You own the system free and clear | Negotiated: buyout, extend, or remove | | WA Battery Scheme eligibility | Full | May be limited (system not owned) |

The financial reality

Scenario A: system ownership (A1 tariff)

• System cost: $9,000 after STC rebate
• Annual bill saving: $1,500/yr (self-consumption displaces 33.26c/kWh grid imports)
• Payback: 6 years
• Years 7–25: approximately $1,500–$1,800/yr savings (net of CPI)
• 25-year total benefit: approximately $40,000 net

Scenario B: PPA at 20c/kWh

• Upfront cost: $0
• Annual electricity payment to PPA company: varies by generation × 20c/kWh
• A 6.6kW system generates ~9,600kWh/yr; assuming 40% self-consumption = 3,840kWh × 20c = $768/yr to PPA company
• Saving vs grid (A1 at 33.26c): 3,840kWh × (33.26 - 20)c = 3,840 × 13.26c = $509/yr saving from PPA
• 25-year total benefit: approximately $12,700 (if rate stays flat)
• Remaining DEBS export revenue (60% of generation × 2c): 5,760kWh × 2c = $115/yr goes to PPA company, not you

The PPA produces roughly one-third of the financial benefit of ownership for a typical Perth household on A1 tariff.

Note on Midday Saver: On Midday Saver, the value of battery storage during peak hours (55.33c/kWh) increases PPA attractiveness somewhat — but the PPA company's ownership of the system still captures most of the upside from tariff optimisation strategies.

Contract terms to examine carefully

Rate escalation clauses: Some PPAs include annual rate escalation of 2–5% per year. At 3% escalation, a 20c/kWh rate becomes 40c/kWh by year 25 — comparable to or above grid rates. The headline "save money forever" claim often assumes no escalation while grid rates also rise, but escalating PPA rates can erode savings faster than headline projections suggest.

Property sale: If you sell your home, the PPA contract typically must either:

• Transfer to the new buyer (who must agree)
• Be bought out (at a cost that may significantly exceed what remains of the system's value to the seller)

A PPA contract can complicate a property sale. Buyers may be reluctant to take on a multi-year commitment to a solar company, or may negotiate a lower purchase price to offset the obligation.

Contract length: Common terms are 10–25 years. A 20-year PPA signed in 2024 runs until 2044. Solar technology changes considerably over 20 years — you may be locked into a system and rate that doesn't reflect market conditions by 2040.

Buyout rights: Most PPAs include an option to buy the system outright after certain periods. The buyout price may be significantly above the system's market value at that point. Check the buyout schedule in the contract before signing.

When a PPA makes sense

Cash flow constraint: For a household that cannot access $7,000–$10,000 upfront and where no-interest finance options (like NILS) are unavailable, a PPA may be the only practical way to access solar.

Maintenance preference: Some PPAs include maintenance responsibility — if the inverter fails, the PPA company repairs it. For households in remote areas or who dislike dealing with tradespeople, this can have value.

Short time horizon: If you're planning to sell the home in 3–5 years, a PPA contract may complicate the sale. But if the sale is certain and the buyout terms are fair, a short-term PPA might suit.

Green finance alternatives to PPAs

Perth households with acceptable credit may access:

• Clean Energy Finance Corporation (CEFC) backed loans through participating banks: typically 4–7% p.a., secured or unsecured
• Green loans: competitive rates, some with interest-free periods
• NILS (No Interest Loans Scheme): for eligible low-income households, up to $2,000 interest-free

A loan at 6% p.a. over 7 years on a $9,000 system adds approximately $1,900 in interest — but the household owns the system outright after year 7 and captures all DEBS export credits throughout. This is typically financially superior to a 20-year PPA.

Questions to ask before signing a PPA

1. What is the per-kWh rate and does it escalate? At what rate?
2. Who receives the DEBS export credits?
3. What happens at property sale — must the buyer take over the contract?
4. What is the buyout schedule if I want to own the system outright in years 5, 10, 15?
5. Who is responsible for maintenance and inverter replacement?
6. What happens at contract end — what choices do I have?
7. Does the PPA affect my eligibility for the WA Battery Scheme?

A solar PPA is a long-term financial commitment. Before signing, model the comparison against a purchased system using the BillWise calculator with your actual consumption data.