Is the Solar ITC Really Gone With a PPA? What Homeowners Need to Know

If you’re researching solar energy in New Jersey, you may have heard that the federal solar Investment Tax Credit (ITC) is “lost” if you choose a solar Power Purchase Agreement (PPA). That statement is misleading. In reality, the solar ITC still plays a major role in PPA pricing—and for many homeowners, a PPA can deliver the full value of the tax credit without tax liability, upfront cost, or long-term maintenance risk.

Here’s how it really works.

The Problem With Relying on the Solar Tax Credit Alone

The ITC is:

• Not a rebate
• Not a cash refund
• Not guaranteed usable for every homeowner

Many homeowners:

• Don’t owe enough in federal taxes
• Need multiple years to apply the credit
• Never fully realize the advertised benefit

This is where solar PPAs offer a different—and often smarter—approach.

How a Solar PPA Uses the ITC for You

With a Power Purchase Agreement (PPA):

• You do not own the solar system
• The solar provider owns, maintains, and insures it
• The provider claims the ITC

But instead of keeping the benefit, the provider uses the ITC to lower the cost of electricity you buy from the system.

The Result:

• No tax paperwork
• No waiting for refunds
• No risk of unused credits

Your savings show up directly on your monthly electric bill.

Why PPAs Can Deliver More Reliable Savings

1. No Tax Liability Required

You don’t need a high income or complicated tax strategy.
Savings are automatic.

2. Immediate Monthly Savings

Owned systems often depend on:

• Future tax credits
• Long payback periods

PPAs typically provide day-one savings compared to utility rates.

3. No Maintenance or Repair Costs

With a PPA:

• Monitoring, repairs, and replacements are included
• Performance risk stays with the provider

If the system underperforms, you don’t pay more.

4. Protection From Policy Changes

Tax laws and incentives can change.
PPA rates are contractually locked in, protecting homeowners from future uncertainty.

Is the Solar ITC “Over” If You Choose a PPA?

No. The ITC is still fully in play.

The difference is who uses it.

• System ownership: You claim the ITC yourself
• PPA solar: A large provider monetizes it efficiently and passes the value back to you

For many homeowners, this results in more predictable and accessible savings.

Solar PPAs in New Jersey: A Smart Alternative

In New Jersey, where electricity rates continue to rise, PPAs remain one of the most popular solar options for homeowners who want:

• No upfront investment
• No maintenance responsibility
• Lower electric bills from day one

At State Renewable Energy, we help homeowners compare ownership vs. PPA solar options based on real numbers—not sales hype.

The Bottom Line

The idea that you “lose the solar tax credit with a PPA” is a myth.

You’re not giving up the ITC—you’re leveraging it through a provider who can fully utilize it and convert it into lower energy costs.

For many homeowners, especially in New Jersey, a PPA doesn’t eliminate the ITC—it maximizes its practical value.