Path-Q Solar

What transfer or termination costs should I check before signing a solar PPA?

Answer

Check for an early-termination or buyout amount, transfer or assumption fees, minimum notice periods, removal costs, roof restoration, unpaid balances, and any requirement that a buyer or lender approve the arrangement. The contract should state how these amounts are calculated, not merely refer to a future quote.

Key points

  • Request the buyout schedule or formula for each relevant contract year.
  • Identify assignment requirements, buyer qualifications, credit checks, and lender approvals.
  • Check who pays for system removal, roof repair, permits, and restoration at termination.
  • Review production shortfalls, unpaid invoices, taxes, insurance, and other amounts that may survive termination.

What it depends on

  • PPA transfer, buyout, and termination clauses
  • Provider calculation method and fee schedule
  • Property sale, refinance, and roof-replacement plans
  • Applicable contract and property rules

Risks and trade-offs

  • A low initial energy price may be offset by a costly exit obligation.
  • Transfer conditions can delay a sale or reduce the number of willing buyers.
  • A provider's right to remove equipment can create roof, permitting, or restoration risk.

Information you may need

  • Complete PPA and all exhibits
  • Year-by-year buyout or termination schedule
  • Transfer process and approval requirements
  • Removal, restoration, insurance, and warranty terms

Your next step

What to do next

Ask the provider to provide written amounts for a hypothetical sale and early termination at several dates, then have the contract 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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