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Third-Party Owner (TPO) Solar Definition
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A third-party owner (TPO) in solar refers to a company that owns, installs, and maintains a solar energy system on a homeowner’s property, while the homeowner pays to use the energy it produces or the system itself.
Instead of purchasing the solar panels outright, the homeowner enters into an agreement with the solar provider. The provider owns the equipment and is responsible for system performance, monitoring, and maintenance.
Third-party ownership is one of the most common ways homeowners go solar in the United States.
How third-party solar ownership works
In a third-party ownership arrangement:
A solar company installs a solar system on your roof.
The solar company owns and maintains the equipment.
The homeowner uses the electricity generated by the system.
The homeowner makes regular payments under a contract, typically lasting 20–25 years.
Because the solar provider covers installation costs and system maintenance, these arrangements often require little or no upfront cost for the homeowner.
Types of third-party solar agreements
Third-party ownership agreements allow homeowners to use solar energy without purchasing the equipment outright.
In these arrangements, a solar provider installs and owns the system on the home. The homeowner then makes regular payments to use the solar energy the system produces over the length of the agreement.
Payments may be structured as a predictable monthly payment or a charge tied to the energy produced, depending on the program offered by the solar provider.
Because the provider owns the equipment, they typically handle installation, monitoring, maintenance, and system performance, making third-party ownership a simpler way for many homeowners to go solar.
Third-party ownership vs. owning solar
When you own solar panels, you purchase the equipment outright or finance it with a loan.
With third-party ownership, the solar provider owns the system and typically receives available incentives and tax benefits, which may be reflected in the customer’s pricing.
For homeowners who want solar without a large upfront investment or system maintenance responsibilities, third-party ownership can provide a simpler path to adopting renewable energy.
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Sources:
1. siea.org | Third Party Solar Financing