What We Signed Up For: Understanding Our Solar Agreement

1. What Is a PPA (Power Purchase Agreement)?

We don’t own the solar panels — Sunrun does. Instead, we’re buying the electricity the system produces, just like we buy power from National Grid.

The big difference is:

• We lock in a known rate from Sunrun that starts lower than National Grid.
• That rate goes up 3.5% per year, but we’re protected from big utility price hikes.

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2. What Will We Pay Over Time?

Here's how our monthly cost grows over time under the 3.5% escalator:

Year	Monthly Cost	Cost per kWh (approx)
Year 1	$177.49	$0.28
Year 10	$240.89	$0.38
Year 15	$285.37	$0.45
Year 20	$337.97	$0.54
Year 25	$400.36	$0.64

These numbers are predictable — no surprise spikes, unlike utility bills.

3. But Won’t That Become More Expensive Than National Grid?

Not likely.

• Right now, National Grid is already charging us ~$0.36 per kWh.
• In the past decade, electricity prices in Massachusetts have gone up 4–5% per year.
• If that trend continues (and most experts think it will), National Grid’s rates will almost certainly exceed what we’ll pay with Sunrun — even with the 3.5% increase.

In simple terms:

We’re betting on stable, predictable bills, while avoiding future utility price hikes.
That’s a safe bet, especially in a high-cost energy state like Massachusetts.

Quick takeaway

Because our Sunrun PPA starts 0.28 /kWh with a 3.5 % escalator while National Grid is already near 0.36 /kWh and has risen 4 – 5 % a year, Sunrun’s price never “catches” National Grid over the 25‑year contract. In fact, the gap widens every year under the growth rates most analysts expect for Massachusetts.

Year	Sunrun (3.5 %)	National Grid @ 4 %	National Grid @ 5 %
1	0.28	0.36	0.36
5	0.32	0.42	0.44
10	0.38	0.51	0.56
15	0.45	0.62	0.71
20	0.54	0.76	0.91
25	0.64	0.92	0.116

Break‑even never occurs within 25 years; in fact, even if grid prices slowed to only 3 % a year, parity wouldn’t arrive until ~year 53.

What would have to change for Sunrun to become more expensive?

If National Grid’s average increase stays below ~2.5 %/yr, the two lines eventually meet and Sunrun could become more expensive thereafter. Anything above that, and the solar price keeps drifting farther below utility power.

Why the hedge looks favorable in Massachusetts

In plain English,  the PPA is a hedge. We’re locking‑in a known starting price ( ₵28 /kWh ) that can only rise 3.5 % a year.
That bet pays off as long as National Grid’s average price growth stays above roughly 2.5 % a year over the life of the contract.

1. History: MA residential rates have risen  4–5 % per year over the past decade.

2. Structural pressures: aging grid assets, offshore‑wind build‑outs, and gas‑price volatility all push utility costs upward.

3. Contract rigidity: Your 3.5 % escalator is fixed; the only variable is how National Grid behaves.

Bottom line

You’re effectively saying: “I’ll pay a predictable solar rate as long as National Grid doesn’t miraculously hold its increases under ~2–3 % a year.”
Given the state’s track record and future investment needs, that’s a fairly conservative hedge.