With a solar PPA, you agree to pay the solar company a per kilowatt-hour rate for the electricity produced by the solar panels. The rate is usually lower than what the local utility charges for electricity.
Definition of Power Purchase Agreement (PPA):
A power purchase agreement is a type of third party ownership (TPO) financing model where there is a two party contract. The system is not owned by the homeowner but instead, the power is purchased at a fixed rate from the solar company that owns the system.
At the end of the PPA contract, the homeowner can extend the contract or buy the solar system from the solar company.