Path-Q Solar

What financial risks should I consider before signing a solar lease?

Answer

Review a solar lease as a long-term contractual payment obligation, not simply as a way to lower the electric bill. Key risks include payment escalators, production or payment guarantees, transfer or buyout requirements, roof-removal charges, insurance obligations, and responsibilities if the property is sold or damaged.

Key points

  • Determine whether payments are fixed or increase over time and model the full payment stream.
  • Check who owns the equipment, receives incentives, maintains it, and bears performance risk.
  • Read sale, refinance, early termination, purchase, and transfer provisions carefully.
  • Confirm responsibility for roof work, system removal and reinstallation, damage, insurance, and property taxes where applicable.

What it depends on

  • The actual lease contract and payment schedule
  • Escalation, buyout, and termination provisions
  • Installer or lessor responsibilities and financial stability
  • Expected ownership period and future roof work

Risks and trade-offs

  • A lease may reduce upfront cost but limit control and create obligations that affect a future sale.
  • Payment increases may exceed the user's actual electricity-cost savings.
  • A buyer or lender may not accept the lease on the desired terms.

Information you may need

  • Complete contract, exhibits, and payment schedule
  • Transfer, buyout, early termination, and removal terms
  • Maintenance, performance, insurance, and roof-work provisions
  • Independent estimate of expected bill savings

Your next step

What to do next

Compare the lease's total and escalating payments with a purchase and financing option, then have the transfer and termination provisions reviewed before signing.

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Some details may depend on your location, installer, utility, incentives, regulations, or specific property.

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