Solar PPA Rate vs Utility Rate: Which Is Right for Your Home
Written by HyreSolar Research Desk Primary-source research and fact checking
Quick answer
Solar PPA Rate vs Utility Rate comes down to upfront cost, lifetime savings and how long you plan to stay in the home; here is each factor side by side.
A PPA saves money only while its price per kWh stays below what the utility would have charged you for the same kWh.
Compare against your own marginal rate, the part of your bill that falls when you use less, not your total bill divided by usage, because fixed charges remain either way.
Then apply the PPA’s escalator: the CFPB reports PPA escalators of 1 to 5 percent a year, and your contract fixes it for 20 or 25 years while your utility rate is not fixed at all.
PPA price vs utility price, side by side
| Solar PPA price | Utility price | |
|---|---|---|
| How it changes | Fixed, or rises by a set escalator; CFPB reports 1 to 5% a year | Set by your utility and regulator; can rise or fall |
| U.S. residential average | No representative figure published | 18.31 ¢/kWh in July 2026, 17.45 ¢ in July 2025 (EIA, preliminary) |
| Fixed monthly charges | None from the provider | Remain even with solar |
| Applies to | Every kWh the system produces, used or exported | Every kWh you import from the grid |
| Term | Typically 20 or 25 years (Sunrun) | Month to month |
| Exit | Buyout, or buyer assumes on sale | None needed |
Sources: CFPB Issue Spotlight (Aug 2024); EIA Electric Power Monthly Table 5.6.A; Sunrun Form 10-K for fiscal 2025.
The break-even test, step by step
1. Find your marginal rate. On your bill, add the per-kWh energy, delivery and rider charges, and leave out the fixed customer charge. That is what each avoided kWh saves. The fixed charge lookup helps separate the two.
2. Split production into used and exported kWh. A PPA bills you for both. Self-consumed kWh save the full marginal rate; exported kWh save only your export credit.
Under net metering those are close; under net billing the export credit can be far lower (see net metering vs net billing). If the PPA price is above your export credit, every exported kWh loses money.
3. Weight the two. Your effective utility value per solar kWh is (self-consumed share × marginal rate) + (exported share × export credit). That, not the headline rate, is what the PPA price must beat.
4. Run it forward. Raise the PPA price by its escalator each year and compare it with a few utility paths: flat, slow rise and fast rise.
Savings over 25 years
An escalator compounds. At 2.9 percent a year, a PPA price doubles in about 25 years; at 1 percent it rises about 27 percent by year 25; at 5 percent it is more than three times the starting price.
Whether that beats the utility depends on a rate path no one can promise.
The EIA’s latest figure shows the national residential average up about 5 percent in one year, but a single year does not set a 25-year trend, and your utility may differ from the average.
A PPA with no escalator transfers all the rate risk to the provider and is easiest to evaluate: if it starts below your effective value per kWh, it stays below as long as utility rates do not fall.
A PPA with a high escalator may start cheap and end expensive. Sunrun’s filing notes renewal after the term is "typically at a 10% discount to then-prevailing power prices", a reminder that the provider prices against your utility too.
Model both contracts in the escalator calculator with your own figures.
Which to choose if…
- 1The PPA starts well below your effective value per kWh with no or low escalator
It is likely to save money for the term.
- 2The PPA price is above your export credit and you export a lot
Push for a battery, a smaller system, or a lower price; or stay with the utility.
- 3The escalator is high and the starting discount small
The utility, or ownership: see lease vs buy.
- 4You may sell soon
Weigh the transfer; the buyer must qualify with the provider.
When you are ready
Ready to explore solar for your home?
If you have done your research and want to speak with a solar professional, HyreSolar can help you explore available options.
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Keep learningQuestions
Is a solar PPA worth it?
What is a typical PPA escalator?
Should I compare the PPA rate to my average cost per kWh?
Sources & retrieval dates
- CFPB, Solar Financing Market Issue Spotlight (August 2024) , Hidden fees typically 10 to 30 percent of the cash price, can exceed 50 percent; stated APRs typically 1 to 7 percent; terms of 8 to 25 years against typical repayment in 7 to 9 years; PPA escalators of 1 to 5 percent; home equity financing usually keeps financing and installation contracts separate. Retrieved 22 October 2026.
- U.S. EIA, Electric Power Monthly Table 5.6.A , Average U.S. residential price 18.31 cents/kWh in July 2026 against 17.45 cents/kWh in July 2025 (preliminary). Retrieved 22 October 2026.
- Sunrun Inc., Form 10-K for fiscal 2025 , Agreements typically 20 or 25 years; rates fixed or escalated at a predetermined percentage; optional upfront prepayment, with prepaid customers refunded for underproduction yearly; maintenance included; end-of-term renewal, fair-market-value purchase or removal; transfer-on-sale terms. Retrieved 22 October 2026.
- U.S. Department of Energy, Homeowner’s Guide to Going Solar , Leases carry fixed monthly payments based on estimated output; PPAs charge a set price per kilowatt-hour produced; the customer of either does not own the system or its tax benefits. Retrieved 22 October 2026.
HyreSolar does not install, finance or sell solar. This page is general information, not tax, legal or financial advice; terms, prices and rules vary by state, utility and contract.