SAM's two Third Party Ownership financial models allow you to investigate a system installed on a residential or commercial building that is owned by a third party under either a power purchase agreement or lease agreement with the building owner.
For an overview of third party solar financing, see the Solar Energy Industries Association page on the topic.
Sample Spreadsheets
For links to Excel workbooks that replicate SAM's cash flow calculations, see the Financial Models page.
Third Party Ownership - Host
The Third Party Ownership - Host model calculates the net present value of a renewable energy system installed on a residential or commercial property. The property owner, or host, makes an agreement with a third party who installs, operates, and owns the system. The system reduces the host's electricity bill, and the host makes payments to the owner.
In a power purchase agreement (PPA), the customer pays for the power generated by the system at a fixed rate called the PPA price. In a lease agreement, the host makes monthly lease payments on the system.
You can use the Third Party Ownership - Host model to:
- Compare the benefit of a lease agreement to a PPA from the host's perspective.
- Compare the Third Party Ownership - Host model to the Residential or Commercial model to compare third party ownership with direct ownership.
- Investigate the value of different electricity rate structures and load profiles under a third party ownership agreement.
SAM's Third Party Ownership - Host model makes the following assumptions:
- Project costs and benefits are from the host (residential or commercial property owner) perspective.
- For a lease agreement, the host makes monthly lease payments with an optional annual escalation rate. Inflation does not apply to lease payments.
- For a PPA, the host makes monthly payments for electricity generated by the system at the rate defined in the PPA with an optional annual escalation rate.
- Inflation does not apply to monthly payments for either the lease agreement or PPA.
In the following video from a 2015 webinar, Nate Blair introduces and demonstrates SAM's Third Party Ownership - Host financial model.
Supporting materials:
- Presentation slides (PDF 1.6 MB)
Third Party Ownership - Host / Developer
The Third Party Ownership - Host / Developer model calculates financial metrics a renewable energy system installed on a residential or commercial property. The property owner, or host, makes an agreement with a third party, or developer, who installs, operates, and owns the system. The system reduces the host's electricity bill, and the host makes payments to the developer for the power generated by the system at a fixed rate negotiated through a power purchase agreement or PPA.
You can use the Third Party Ownership - Host model to:
- Determine the PPA price that covers the developer's costs.
- Investigate the value of different electricity rate structures and load profiles under a third party ownership agreement.