Do you want to know how to get out of a solar PPA or solar lease contract?
In most cases, solar companies who provide solar leases and solar PPA (power purchase agreement) tie to the home’s title, making it nearly impossible for 15 to 20 years.
You are going to be paying for the solar power system in the long run, and maybe even with your electric bill because of solar PPA and leases.
Even if you inherited a solar lease or solar PPAs from a home purchase, can you get out of it? How is this different from a solar loan? We are going to unpack your financing options in this article.
Know Your Solar Rights Before You Sign
There should be no doubt that getting a solar system is wise. Your home can generate clean and renewable energy for decades by installing solar energy.
Problems can start to arise when you choose the wrong company. A good solar company will give you a copy of The California Solar Consumer Protection Guide and help you understand what your rights are:
- Your solar provider must give you time to read The California Solar Consumer Protection Guide before you sign the contract. If they did not, you could report them to the Contractors State License Board (CSLB) at 800-321-CSLB.
- You have the right to a full copy of the solar contract and financing agreement in your language.
- The solar company must also provide you with a complete Solar Energy System Disclosure Document created by the Contractors State License Board (CSLB). This document shows the total cost of the solar energy system, like a receipt.
- You have the right to a 3-day Cancellation Period after signing a solar contract or agreement. That’s three business days to change your mind and cancel the solar contract.
So, if you’re lucky enough to have just signed your contract less than three days ago, canceling the solar contract should be easy!
Should I Sign The Home Solar PPA or Lease?
Let’s quickly go through the Home solar PPA and lease:
- Solar Power Purchase Agreement (PPA):
- Financial Implications: With a PPA, you’ll be tied to a long-term agreement, often spanning a decade or more. This means you’ll have to purchase the electricity generated by the solar panels at a predetermined rate.
- Cost Stability: While PPAs may offer a fixed electricity rate, it’s worth noting that these rates are often set by the solar company (they also increase each year or based on the usage term) and might not always guarantee long-term savings. If the solar power system is not generating your actual usage, you will still pay an electric bill.
- Responsibility: The convenience of having the solar company handle maintenance and repairs comes at a cost. You’ll be dependent on their responsiveness and may not have control over the system’s maintenance schedule or quality of service.
- Ownership: Remember, with a PPA, you won’t own the solar panel system. This means you won’t have the freedom to make changes like adding a better or upgrades to the system as you see fit.
- Solar Lease:
- Upfront Costs: Leasing solar panels may appear attractive due to lower or even zero upfront costs, but keep in mind that you’ll be making regular lease payments to the solar company instead of investing in a system you can truly own.
- Maintenance and Repairs: Similar to a PPA, the solar company will mostly take care of maintenance, repairs, and insurance. However, this can limit your control over the system and leave you dependent on their response times and quality of work.
- Ownership: With a lease, you won’t have ownership of the panels, which means you won’t benefit from any potential long-term financial gains or the ability to customize the system to suit your changing needs.
- Flexibility: While leasing might offer short-term flexibility, keep in mind that lease agreements typically span several years. Terminating or modifying the agreement might come with limitations and additional costs.
After a quick explanation above, you can easily tell the benefits of owning your home solar panel system.
Owning your own solar panel system offers distinct advantages over solar PPAs and leases due to the long-term financial benefits, complete ownership and control over the system, potential for increased property value, and significant long-term savings on electricity bills.
Can I Get Out of a Solar Lease Contract and Why Solar Leases Are Bad for home solar?
In most cases, the only way out is to spend more money. Yeah, that’s probably not what you wanted to hear.
Sadly, large companies like SunRun and other solar companies with leasing write solar lease contracts to be a long-term agreement between you and them, and they don’t want homeowners like you to end your contract early.
The three typical ways to get out of a solar lease are to:
- Solar lease buyout – Buy out the remaining part of the solar lease or keep making monthly payments. (You need to refer to the buy-out options and prices directly in the contract)
- Purchase the solar PV system in its entirety at market price
- Transfer your solar lease agreement
The buyout method requires you to prepay the balance of what you owe on the solar lease. You can then remove the solar panels or use the system independently. Most solar companies that lease do include a buyout price and period in your contract, so at least they won’t be making the number up on the fly.
You know what you are getting into before you undertake the financial burden of a buyout. However, buyouts usually aren’t an option until year five or seven of your lease. If you just got into the agreement, check your contract, but you may be in the lease for a while.
Your contract may allow for market-value purchasing. This way is a little slipperier than the buyout. Usually, the solar company brings in an appraiser to assess your system’s value.
The assessment considers your system’s age and current comparable options available on the market. Still, you may end up paying more than if you just finished your contract or were financed in the beginning. Your home solar PV system is an appreciating asset.
You may be thinking that transferring your solar lease will save the day. You were going to sell your home anyway, now may be the time. Good thought, and solar does improve the value of your home. Win-win, right?
Well, according to the National Renewable Energy Laboratory (NREL), homes with solar panels sell 20% faster and for higher values than comparable non-solar homes, but a new buyer may not want to take over your lease agreement.
They would rather own the system, and you may become a valuable asset. Now, you might have to revert to the buyout option.
Solar leases make getting out a lot harder than getting in.
Can I Cancel My Solar Lease Contract After Installation?
After installation, you may notice that your lease payment is more than your original utility bill. That could be due to improper sizing or the solar lease “escalator clause” that allows the company to raise your payment by 3-5% annually.
Unfortunately, the only time you can is before installation, normally. There may be some unique stipulations in your contract, cancellation penalties, etc., but you can typically cancel your solar lease if:
- System installation hasn’t occurred yet.
- Cancel within the pre-installation time period stated on the contract. This time frame may be different from one leasing company to another, but you can expect it to be around 30 days after signing a contract.
- Some “unexpected and unforeseen additional expenses” become apparent, like replacing or repairing your roof. Look under your contract’s “unexpected and unforeseen additional expenses” clause.
Most people only figure they want out of their solar lease after all three of these scenarios have passed. Therefore, you are looking at paying more money to escape your contract.
How to Get Out of a Solar Lease After Installation?
The first thing to do is check your solar contract. Most solar lease contracts are very difficult to cancel without legal action. If you feel like the solar company you hired has done something illegal, you should fill out a Solar Complaint Form and contact a lawyer for legal advice.
The easiest way to get out of a solar lease is: Simply don’t get into one! Avoidance is the best protection from solar lease and solar PPA pitfalls and hidden costs.
However, Solar PPA has better advantages for commercial solar systems:
- Commercial solar PPA can provide cost savings for business owners, as they can avoid upfront costs for purchasing and installing solar equipment. Instead, the customer pays for the energy produced by the solar system at a predetermined rate, which is often lower than the retail electricity rate.
- The PPA for commercial solar projects also offers predictable energy costs for businesses, as the rate for electricity is fixed for the duration of the agreement, typically 10 to 25 years. This can help the customer with long-term budgeting and planning.
- The Commercial Solar Power Purchase Agreement can reduce the financial risk for the business owners, as the developer is responsible for financing, installing, and maintaining the solar system. The customer can focus on their core business activities while still benefiting from solar energy.
Take the time to read the “fine print” of the lease contract to understand everything you are signing up for, and after you do that, research other options like financing.
Check out our knowledge-based solar blog before you go solar. Option One Solar will always work with customers to ensure a great designed solar system that functions at peak performance.
Can I take the solar panels off by myself?
We do not recommend removing the solar panels by yourself.
Solar panel removal involves intricate processes and potential risks that require specialized electric knowledge, training, and equipment to ensure safety and efficiency.
By engaging a professional, you not only protect yourself from potential hazards but also avoid unexpected damage to your solar system.
Trusting experienced technicians with solar panel removal ensures the best outcome for you and your investment in renewable energy.
The Best Local Solar Contractor
Finding a great company that will give you every option available with its pros and cons to make an informed decision is the best way to start. Option One Solar will do that for you!
More questions? Check out our Solar FAQ
Before you sign, get a second opinion.
We advise every homeowner to educate themselves on different available solar options before deciding. Many sales tactics out there are deceptive and misleading; whether it’s a purchase, lease, or other option, choosing the wrong company could quickly become a lasting headache.
If you have already received a quote from another company, one of our solar experts would happily review it over the phone with you and let you know if it’s a good or bad investment. We will analyze the proposed equipment and contract and ensure you are being quoted a solution that meets your needs. Give us a call at 760-646-8444.