Prepaid PPA: pay ahead, own later.
A discounted price today, no lien on your home, and ownership after the term.
A prepaid power purchase agreement is the discounted way to go solar in 2026. A financing partner owns and maintains the system, you prepay for its power at a reduced price, and most agreements let you take ownership around year six. Roughly nine of ten Kilo customers choose it.
What is a prepaid PPA?
The partner owns the system for a required period, claims the federal commercial clean-energy credit, and passes that value into your price, so the prepaid amount is discounted against a cash purchase. Credit-union partners finance the homeowner portion with a range of terms.
The provider’s only filing is a standard UCC-1 notice on the equipment. There is no lien on your home, maintenance is handled during the term, and the agreement generally transfers if you sell.
Compare all payment optionsUpdated November 4, 2026
Educational overview, not tax or financial advice. Credit eligibility, percentages, ownership terms, and deadlines depend on current federal law and your specific agreement. Your provider’s agreement sets the offer; your tax professional has the final word. See IRS residential credit guidance (opens in a new tab) and commercial solar guidance (opens in a new tab).
Get these details in writing.
- Prepaid price and coverage period
- Who handles maintenance, repairs, and monitoring
- Timing and price of the ownership option
- Transfer terms, and financing terms if financed
How the 2026 credit lowers your price.
The residential purchase credit ended after 2025. Third-party owners can still claim the commercial credit and pass it into your price.
A partner owns the system
You do not buy the equipment upfront. A financing partner builds, owns, and maintains it, and as a commercial owner qualifies for the federal clean-energy investment credit.
The credit lowers your price
Up to 30% of the system’s value flows into your prepaid price. Pay it upfront or finance it. You need no tax liability of your own to benefit.
You take ownership later
Most agreements open the option around year six. Take the system outright then, or leave the prepaid arrangement running.
Prepaid PPA vs. the alternatives.
General comparison. Your proposal supplies the prices and terms.
Scroll sideways to compare all three options.
| What to compare | Prepaid PPAProvider ownership, option to own | Cash purchaseSystem ownership | Solar loanSystem ownership |
|---|---|---|---|
| Upfront cost | Discounted prepaid amount, paid or financed | Full system price | Low or $0 down |
| Ongoing solar bill | None; the power is prepaid | None | Loan payment plus interest |
| Federal credit in 2026 | Built into your prepaid price | Residential credit ended after 2025 | Residential credit ended after 2025 |
| Maintenance | Handled by the owner during the term | Yours | Yours |
| Lien on the home | None; UCC-1 on the equipment only | None | Depends on the loan |
| Path to ownership | Option to own around year six | Own from day one | Own from day one |
Key terms.
- Power purchase agreement (PPA)
- A provider owns the solar system on your roof and you buy the power it produces, traditionally through a monthly bill.
- Prepaid PPA
- The same ownership structure, but the power is paid for upfront at a discount. No ongoing solar bill once it is prepaid.
- Commercial clean-electricity credit
- The federal investment credit for businesses that own solar systems. The owner claims it and the value flows into your price.
- Section 25D residential credit
- The credit homeowners claimed on systems they bought. It ended for systems placed in service after December 31, 2025.
- UCC-1 filing
- A public notice that the provider has an interest in the equipment. Not a lien on your property; released when you take ownership.
- Ownership option
- Your right, written into the agreement, to buy the system after the required term. Confirm when it opens and how the price is set.
Prepaid PPA questions.
How is a prepaid PPA different from a regular PPA?
A traditional PPA bills you monthly for the power your system produces. A prepaid PPA discounts that power into one upfront amount, paid or financed, and gives you the option to own the system later. There is no ongoing solar bill.
Do I have to pay the whole thing upfront?
No. Pay in cash, or finance the prepaid amount through one of our credit-union partners across several term lengths. Either way the discounted, credit-backed price is locked, and your quote shows both paths.
Do I eventually own the system?
If you want to. The partner owns and maintains the system for the required period, which is what lets them claim the commercial credit. When the window opens, typically around year six, you choose to take ownership or keep the prepaid arrangement running.
Is there a lien on my house?
No. The provider records a standard UCC-1 filing on the equipment itself, the routine notice used throughout solar financing, and it is released when you take ownership.
Didn’t the solar tax credit end?
The residential credit for homeowner-purchased systems (Section 25D) ended for systems placed in service after December 31, 2025. The commercial clean-electricity credit still applies to third-party-owned systems like prepaid PPAs for a limited window, which is why this structure matters in 2026.
Does it use a tax credit I claim myself?
No. The commercial credit belongs to the provider that owns the system. The discount you receive is the one stated in your proposal, not a percentage you claim on your own return.
What happens if I sell my home before taking ownership?
Prepaid agreements are generally transferable to the new homeowner, and because the power is already paid for, a system with no monthly payment is usually a selling point. We walk through the transfer terms of your agreement.