Pre-Paid Power Purchase Agreement FAQs
Find answers to many common questions pertaining to HDM Pre-Paid Power Purchase Agreement (PPA) financing
The Most Important Questions
Why would I use HDM’s Pre-Paid PPA?
Federal tax credits for residential systems end on December 31, 2025. A pre-paid PPA qualifies residential systems for commercial tax credits that are not available to homeowners buying their systems directly. This allows homeowners to receive an up-front discount when compared to buying a system outright.
You pay the same amount you would to buy the system, but with a substantial discount. No hassle at tax time or paperwork on your taxes – HDM takes care of all of the headache. HDM is also responsible for any system maintenance and repairs at no additional cost to you for the first 6 years.
After year 6, the system transfers to your direct ownership. No hidden fees or hassle.
What is the HDM Pre-Paid PPA?
The HDM Pre-Paid PPA is an innovative approach that combines the benefits of a lease/PPA (no maintenance responsibility) with the long-term savings of a cash purchase.
The HDM model allows HDM Renewable Finance to own the system for the first 6 years. During this time, HDM can claim the valuable commercial tax incentives (like the Federal Investment Tax Credit and depreciation). These savings are monetized upfront and passed directly to you in the form of significant upfront discounts.
After year 6, the system transfers ownership over to you at no additional cost.
How Does the HDM Pre-Paid PPA Work?
Do I own the solar system?
Initially, no. HDM Renewable Finance owns the system for the first part of the agreement (6 years) to utilize the tax benefits. However, ownership is then scheduled to transfer to you at the end of that period at no extra cost. This gives you the long-term benefit of ownership without the upfront complexity of claiming tax credits.
Are there any monthly solar payments after I pay Michael & Sun Solar?
No. After you pay Michael & Sun Solar the discounted contract price, your monthly payment to HDM for the solar power generated is $0. You only pay your utility for any electricity you use from the grid that is not covered by your solar production.
If you utilize a loan to pay Michael & Sun Solar the upfront contract price, you will remain responsible for your loan payments to the lender. Neither HDM nor Michael & Sun Solar assume any responsibility for any loans to pay the upfront contract price.
Who is responsible for system maintenance and repairs?
HDM Renewable Finance. During the initial PPA term, HDM is responsible for all system monitoring, maintenance, and repairs at no cost to you. Once ownership transfers, the equipment warranties will also transfer to you – if something goes wrong after ownership transfers, the manufacturer’s warranties will still cover the equipment for their duration.
In addition to the equipment warranty transfers, Michael & Sun also provides a warranty on our work. Rest assured – you’re covered.
Addressing Common Concerns
Do I get the Federal Solar Tax Credit (ITC)?
No, you do not directly claim the ITC. Since HDM owns the system initially, they claim the commercial tax benefits. The value of those benefits is instead given to you through an upfront discount, which is often a simpler and more immediate way to realize the savings.
What happens when I sell my home?
This is a major benefit of the HDM Pre-Paid PPA:
- Before Transfer (Years 1-6): The PPA can be easily transferred to the new homeowner, who inherits a fully paid-for solar system with $0 monthly solar payments. This is a significant selling point that adds value to your home.
- After Transfer (Year 7+): You own the system outright, which is treated like any other home asset and transfers directly with the sale of the property.
What about system warranties and if the system underperforms?
The system comes with standard equipment warranties (e.g., 25 years for panels). Because HDM owns the system during the initial term, they are obligated to ensure the system is performing correctly and will handle any system-related repairs and maintenance. Once ownership transfers, you will be covered by the long-term manufacturer warranties.
What if I move to a state where the HDM Pre-Paid PPA isn't available?
The PPA is tied to the property, not the homeowner. If you sell your home, the agreement is simply transferred to the new owner, who takes over the benefit of the prepaid, $0-a-month electricity.
