| Decision point | PPA | Utility green tariff |
|---|---|---|
| Counterparty / route | Developer or generator; structure varies | Utility under approved program |
| Availability | Market, project and buyer requirements | Tariff eligibility and available capacity |
| Supply boundary | Physical, financial or on-site arrangement | Utility program’s bundled supply rules |
| Key review | Production, settlement, site and credit risk | Program costs, allocation, term and exit |
Specify which PPA is being considered
An on-site solar PPA typically involves a third party owning the system while the host purchases output under an agreement. A physical off-site arrangement addresses delivery and market access differently. A financial PPA can settle price differences without supplying the facility’s ordinary retail electricity. Treating these as one generic PPA would hide important legal, operational and accounting differences.
Determine who bears project delay, production, curtailment, location-basis and settlement risks. Review site rights, maintenance access and end-of-term obligations for an on-site project. For any off-site structure, identify how the facility continues to receive retail supply and which additional services or contracts are necessary.
Understand the utility program boundary
A green tariff is a utility offering subject to its approved rules. It may allow eligible larger customers to obtain bundled renewable power from specified resources, but enrollment size, term, capacity and cost allocation vary. Ask the local utility for the current tariff and eligibility determination rather than assuming a statewide announcement applies to the account.
Compare treatment of excess or insufficient generation, credit mechanisms, program premiums and exit provisions. The utility’s administration may simplify some aspects for the buyer, but it does not remove the need to understand the commitment. Confirm that renewable attributes are transferred or retired for the business under the intended claim.
Hypothetical economic scope check
Suppose a proposed project is expected to generate 1,000 MWh annually at an invented $70 per MWh PPA price. The simple output purchase amount is $70,000, but it is not a complete facility bill. Retail supply, delivery, project output variation and any settlement structure still need analysis.
Imagine instead a hypothetical tariff applies a $4 per MWh program charge to 1,000 MWh, adding $4,000 under its stated rules. That charge alone cannot be compared with the PPA’s $70,000 output purchase. Each number covers a different scope. Build a common full-period cash-flow model before claiming one route costs less.
Evaluate capability and commitment before selection
Assess the business’s credit, expected site tenure, reporting objective and ability to manage project-specific obligations. A long agreement may outlast a lease, operating plan or sustainability target. Review assignment, default, termination and change-of-law terms with the appropriate advisers for the actual transaction.
Preserve project specifications, tariff documents, model assumptions and certificate ownership terms. Use sensitivity cases for production and settlement instead of a guaranteed-savings statement. This educational comparison is a screening framework; it does not establish tax treatment, derivative accounting, project feasibility or entitlement to a renewable claim. Those conclusions require the actual structure and documentation.
Questions & answers
Is a financial PPA a replacement for my retail contract?
Generally it is a separate settlement arrangement. The actual structure must explain how ordinary retail supply continues.
Sources & scope
Primary references reviewed October 15, 2026. These sources support the stated concepts; actual tariffs, program rules and signed agreements govern the account. Decision examples and operational worksheets are original educational analysis.
- EPA: Solar Power Purchase Agreements
Third-party-owned on-site solar arrangements and the importance of renewable certificate ownership. - EPA: Utility Green Tariffs
Utility-administered bundled renewable programs and program-specific eligibility. - EPA: Guide to Purchasing Green Power
Definitions of physical and financial PPAs and renewable procurement considerations. Use current project and program documents for an actual transaction.