Solar Lease Contract & PPA – Should I Sign?

Solar companies that provide solar lease contracts and solar PPA (power purchase agreement) usually contract for 10 to 25 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 cancel 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

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 just signed your contract less than three days ago, canceling the solar contract should be easy.

Solar quote example for solar lease contract

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. This means you'll have to purchase the electricity generated by the solar panels at a predetermined rate per kilowatt-hour (kWh).
    • Cost Stability: While PPAs may offer a fixed electricity rate, it's worth noting that the solar company often sets these rates (they also increase each year or based on the usage term) and might not always guarantee long-term savings.
    • Responsibility: The perk with PPA is having the solar company handle maintenance and repairs at no cost.
    • Ownership:  A third party owns the solar system, and you purchase its electricity.
    • Transferability: Generally, most PPAs include a clause that allows for the transfer of the agreement to a new property owner, subject to credit approval.
  • Solar Lease:

    • Upfront Costs: You pay a fixed monthly lease payment, regardless of how much electricity the system generates. Your savings are more predictable but may be lower since they are not tied to performance.
    • Maintenance and Repairs: Similar to a PPA, the solar company will take care of maintenance, repairs, and insurance.
    • Ownership: You lease the solar system from a third-party owner but do not purchase the electricity separately.
    • Transferability: If you sell your property, most solar leases allow you to transfer the lease to the new property owner, subject to credit approval.

Owning your 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 Cancel the Solar Lease Contract?

In most cases, the only way out is to spend more money. Yeah, that’s probably not what you wanted to hear.

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.

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, and make sure the details in the contract regarding the buyout options.

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.

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.

According to the National Renewable Energy Laboratory (NREL), homes with solar panels sell 20% faster and for higher values than comparable non-solar homes.

Related Articles:

Utility Rates Are On The Rise – Time To Go Solar

Solar Investment Tax Credit (ITC) – What You Need to Know

What is Solar PPA?

Day to Night: How Solar Battery Backup Systems Keep Your Home Running

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 solar utility providers to raise your payment by 3-4% annually.

You can typically cancel your solar lease if:

  • System installation hasn’t occurred yet.
  • Cancel within the pre-installation 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.

How to Get Out of a Solar Lease After Installation?

The first thing to do is check your solar contract.  If you feel like the solar company you hired is not working according to the contract, you should fill out a Solar Complaint Form.

However, Solar PPA has better advantages for commercial solar systems:

  1. 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.
  2. 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.
  3.  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. Business owners can focus on their core business activities while 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 well-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 available solar finance options before deciding. Many sales tactics are deceptive and misleading; choosing the right solar company is the most important approach, whether a purchase, lease, or other option.

If you have already received a quote from another company, one of our solar experts would happily review it over the phone 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.


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