Prepaid solar PPA in California: contract checklist for 2026

What prepaid solar power actually buys

The CPUC describes a PPA this way: “you typically pay for all the power the solar system generates (at a fixed per-kilowatt-hour rate),” and “the solar provider owns the system on your property.” Its question list for PPA shoppers includes: “Is there an option to make a down payment to reduce my monthly payments (for a lease) or kilowatt-hour rate (for a PPA)?” (CPUC, California Solar Consumer Protection Guide, checked September 23, 2026.) A prepaid PPA is that option taken all the way: you pay for the expected electricity at the start.

So “prepaid solar power” or “prepaid solar energy” means electricity you have paid for before it is made, from equipment you do not own. Where your payments sit within the four ways to pay for solar is set out in the lease, PPA, loan and cash comparison.

Do not assume that prepaid means no future payment, no escalator, no transfer requirement or ownership. Ask the provider to point to the exact contract clause for each answer.

Solar PPAs in California: the rules that apply to any PPA

Prepaid or monthly, a residential power purchase agreement in California comes with the same state protections. PPAs are also the most common way Californians go solar without buying: California Distributed Generation Statistics shows PPAs were about 42% of residential solar projects at PG&E, SCE and SDG&E that received permission to operate in 2025 (DG Stats, data through May 31, 2026, checked September 23, 2026). Before you sign any PPA, the CPUC’s consumer guide says (CPUC, checked September 23, 2026):

• The provider’s CSLB license “must be active and in classification C-46 (Solar Contractor), C-10 (Electrical Contractor), or B (General Building Contractor).”
• By law the provider must give you a completed Solar Energy System Disclosure Document: a cover page showing the total costs and supporting information with a standardized bill savings estimate.
• Savings estimates may assume utility rates rise by no more than 10% a year, and “electricity bill savings estimates do not guarantee savings.”
• You have at least three business days to cancel for any reason, or five if you are 65 or older.

How a monthly PPA works from start to finish is in solar PPAs explained, and how to choose between providers in how to compare solar PPA companies. A business weighing a PPA should read commercial solar PPA vs purchase; the rules and tax position differ.

Prepaid PPA or prepaid lease?

Both move the payments to the start and both leave the provider owning the system. A prepaid lease pays ahead for scheduled lease payments. A prepaid PPA pays ahead for electricity at a per-kWh price, so ask what happens if the system produces more or less than the amount you prepaid for: is there a true-up, a refund or a minimum energy guarantee? One provider's annual report shows what a written answer looks like: Sunrun says that if a prepaid system's estimated production is less than actual production “after the first full one to two years of the agreement, prepaid customers are refunded the difference at the end of each such year,” and extra production is theirs at no charge (Sunrun Form 10-K, filed February 26, 2026). Other contracts differ. The lease version has its own guide to prepaid solar leases.

Put these terms in one comparison sheet

Can you buy out a solar PPA?

Usually there is a way out, but it is priced by the contract, not by law. The CPUC warns that ending a lease or PPA early can mean you “might have to buy out the contract, which could be thousands of dollars,” and puts two questions on its list: “What happens if I wish to end the lease or PPA early?” and “If I end my agreement early, will I owe a balloon payment and/or an early termination fee? If so, how much will I owe?”

On a prepaid PPA, ask two more: does a buyout credit the electricity you already paid for but have not received, and is the buyout price a formula you can calculate yourself for any year of the contract? Get both answers in the contract, not in an email.

Compare the full payment obligation, not the first number

The CPUC's first two questions for any lease or PPA are “What is the total cost of the solar system or solar energy over the entire course of the contract?” and “How much will I pay up front, how much over time, and for how long?” For a prepaid offer, ask for the full schedule even if the proposal leads with one payment. Compare it with the cash price and with any loan, lease or monthly-PPA proposal on the same system design and utility-use assumptions.

Then add the utility bill that remains. On PG&E, SCE and SDG&E, new solar customers take service on the Net Billing Tariff, which credits exported electricity at values the CPUC says are “usually lower than the retail rate” (CPUC, checked September 24, 2026). You have prepaid for every kWh the system makes, including the ones you export for a smaller credit.

Who claims the tax benefits

Prepaying does not change who owns the system, and ownership decides who can claim a credit tied to it. The homeowner credit is gone for new systems anyway: the IRS says the Residential Clean Energy Credit “is not available for any property placed in service after December 31, 2025” (IRS, checked September 23, 2026). The provider may have its own business tax position. That is not a credit you claim and not a promised price cut. This page found no source stating whether a prepaid PPA provider issues a 1099 or any other tax form for the arrangement; ask the provider in writing what tax documents, if any, it sends, and ask a tax professional about your own return. What California still offers is in California solar incentives in 2026.

Review California disclosure documents before signing

California's consumer-protection materials direct solar customers to review the Solar Energy System Disclosure Document and supporting information, along with the contract and any separate financing papers. Check the contractor license and the salesperson registration where applicable. Keep a copy of every signed version and change order.

1. Ask for the complete agreement and all exhibits before deciding.
2. Confirm the contractor, salesperson and equipment named in the documents.
3. Compare the prepaid structure with cash, loan, lease and monthly-PPA documents on the same design.
4. Check home-sale, roof-work, removal, repair and end-of-term terms before signing.

What happens if the provider stops operating

The CPUC names the risk in its guide: “Solar provider could go out of business during the contract period” (CPUC, checked September 23, 2026). It has happened to a large residential provider: Sunnova Energy International and two affiliates filed Chapter 11 petitions on June 8, 2025, in the U.S. Bankruptcy Court for the Southern District of Texas, and said they planned to keep operating while pursuing asset sales under the court's supervision (Sunnova, Form 8-K, filed June 9, 2025). What that filing means for customers is covered in the Sunnova review.

One point is specific to prepaying: if a provider fails after you have paid in full, that money is already spent, while a monthly customer's future payments simply stop. Get warranty, maintenance and production-guarantee terms in writing before prepaying, including what happens if the company is sold or shuts down.

A referral request does not select a payment model

California Rate Relief is a referral service. We are not a licensed contractor. A request for a review does not approve a PPA, determine a price or tax result, or promise a buyout, savings or provider availability. Review the written documents from any provider before choosing a payment structure.