How to Get Out of a Solar Panel Contract
You were excited about lowering your energy bills with solar panels (or maybe you’re just passionate about clean energy to save the earth) and rushed into a deal – but now you’re trapped in a contract that’s causing more stress than savings…
Maybe you signed a PPA without fully understanding it, or the promised financial benefits haven’t materialized. Either way, though it may take some effort, it’s possible to get out of your solar panel contract.
And we’ll dive deeper into that in this article. This guide is also for you if:
- You’re desperate to cancel your solar lease or Power Purchase Agreement (PPA).
- You’re moving and need to deal with solar panels on your current home.
- You’re thinking of buying a house with solar panels already installed.
Common Reasons Homeowners Want to Cancel a Solar Panel Contract
Look, solar energy is GREAT. Not only does it cut down on electricity bills by reducing reliance on the grid, but it’s also been proven to increase your home’s value. So, why do some homeowners want out of their solar panel contracts?
From our observations and what we’ve learned from past customers, here are a few common reasons.
Annual Rate Increases
When you sign a solar contract, it’s typically one of three types:
- Solar financing (loans)
- Power Purchase Agreement (PPA)
- Solar lease
Let’s talk about the latter two first.
PPAs and solar leases allow you to pay for solar power at a much lower rate than your utility provider, and most offer no upfront costs to install the system.
What many homeowners don’t realize – or don’t give much thought to – is that both come with annual rate increases (also called annual escalators), usually around 3% to 5% per year.
With a PPA, the rate increase applies to the fixed price per kilowatt-hour (kWh) of energy you buy, whereas with a solar lease, the increase is typically on the monthly payment you make for the system.
Over time, those increases can quietly add up. So, the initial discount you enjoyed? You’re essentially paying for it later. You may even find yourself spending more than you expected partway through the contract, which cancels out any long-term savings.
That’s why many homeowners lean toward solar financing. Although payments may initially be higher than what you’d pay under a PPA or lease, they stay steady with no annual rate hikes. Plus, you gain full ownership of the system, which comes with its own set of benefits.
Moving or Relocating
Life happens and homeowners might find themselves having to relocate while still under a solar panel contract. Unfortunately, the contract doesn’t end just because you’re moving…
You remain obligated to your panel’s monthly payments – even if you’re no longer using them.
Yes, you can sell your home and “transfer” the contract to potential buyers (more on this later). But this can be a tough sell, as many buyers might hesitate to take on this financial commitment.
And you’ll find yourself having to negotiate further and offer incentives, which often leaves you at a disadvantage.
Solar Scams
Not understanding how a solar contract works is one thing, but falling victim to a solar scam is a whole different issue.
Some of the scams homeowners fall for include:
- Claims of government subsidies covering the cost of the system
Note: Subsidies are only available if you own your solar system – either by purchasing it outright or through solar financing. If you’re under a PPA or lease, the solar company owns the system, and you won’t be eligible for these benefits.
- Too-good-to-be-true offers, like a year free of solar power or zero-interest financing
- Inflated, unrealistic savings claims
And note, these con artists are getting more creative with their scams.
They often use high-pressure tactics and offer limited-time deals to rush you into signing a contract. Only then will you find hidden fees, inflated costs, and deceptive conditions tucked away in the fine print.
Worst, after collecting payment, they ignore your calls, never install the system, and disappear with your money.
How to Cancel a Solar Lease Before Installation
If you’ve signed a solar lease but the system hasn’t been installed yet, you still have a good chance of canceling the contract without incurring any penalties or costs – a relief if you were pressured into signing the contract and are now having second thoughts.
Here’s when you can consider a pre-installation cancellation:
- During the Cooling Off Period
Many states provide a “cooling off period” – typically 3 business days – that allows you to cancel without penalties. For example, states like Utah and Nevada have clear laws supporting this.
Check your contract or state regulations for specific timeframes since they can vary.
- If Unforeseen Expenses Arise
Unexpected costs, like needing to replace or repair your roof, may allow you to cancel. Look for an “unexpected and unforeseen additional expenses” clause in your contract. Most agreements include this provision, letting you back out if these types of costs come up.
- Past the Cooling Off Period (But Before Major Work Starts)
Even if you’ve missed the cooling-off window, you might still be able to cancel if the installer hasn’t begun major work, such as preparing your roof or installing equipment.
However, some companies may charge a penalty for initial work like site inspections or design plans.
That said, it may not be a zero-cost situation, but at least you can cut your losses early and save yourself major headaches down the road.
Many contracts also have provisions, such as a 30-day cancellation clause, to cover situations like this – something you should definitely look into once you have the agreement on hand.
To request cancellation, contact your solar company directly, via phone or email. Ideally, you’ll receive a formal cancellation document to confirm the process.
That said, procedures can vary from company to company. Be sure to review the agreement for any specific instructions or requirements.
Word of advice: Some companies will stop at nothing to make sure you don’t cancel your solar lease. They’ll make excuses to stall you or try to guilt you for backing out. Don’t let these sway you as these are just desperate attempts to pressure you to reconsider.
How to Cancel a Solar Lease After Installation
If you’ve missed the pre-installation cancellation window, things can get more complicated. Unfortunately, there’s no escaping this without significant costs, but there are still ways to break free from the lease.
Buy Out the Lease
This option involves paying off the remaining balance on your lease. Your contract will outline the buyout terms and pricing, often giving you two main options:
- Lease Buyout – pay the remaining lease payments in full.
- System Purchase – buy the entire solar system outright at its fair market value
Whichever option ends up being higher will usually determine the final cost.
If you’re buying the system, and the purchase price isn’t specified in your agreement, an appraiser will typically come to assess its overall value.
However, note that a buyout is usually unavailable until you’re at least 5 to 7 years into the lease. Until then, you’ll have to continue making the agreed monthly payments.
Once you’ve paid either the lease buyout or the system purchase price, ownership of the solar system transfers to you. From there, you can decide to have it removed or keep the system in place – whether for personal use or as part of a property sale.
Transfer the Lease to a Home Buyer
Here, you’re essentially transferring the remainder of your lease or, alternatively, buying out the system and including it in the sale of your house…
This isn’t technically “canceling” the lease, but it does allow you to pass on the financial responsibility to a new homeowner, provided they’re willing to take it…
Because many buyers might love your house, but only a few are willing to inherit a lease they didn’t plan for.
Naturally, you’ll have to lower the price of the house to offset the cost of the lease transfer. But you can always get creative to reduce your financial disadvantage.
Once you find a willing homebuyer, the solar company will likely perform a credit check to ensure the new homeowner can handle the lease payments moving forward.
Claim a Breach of Contract
If a solar company is not fulfilling their end of the contract post-installation, you may have valid grounds to claim a breach of contract. Here are some common situations where this might apply:
- Failure to install the solar system within the agreed-upon timeframe
- Incomplete or substandard installation that doesn’t meet the specifications
- Failing to perform regular maintenance as outlined
- Not honoring the warranty or service agreements detailed in the contract
- Charging hidden fees or overbilling beyond what is clearly defined in the agreement
The key here is to look closely at your contract to check the exact terms they’ve violated. Then, you’ll want to gather any evidence that shows how they haven’t held up their end.
When you’re ready to move forward, send a formal Notice of Breach to the company.
You can do this yourself, but having an attorney can help you solidify your claims and address all legal points. They can also guide you through the next steps, especially if the solar company refuses to cooperate and the situation needs to be escalated to court.
How to Cancel a Power Purchase Agreement (PAA)
Pre-installation cancellation for a PPA is quite similar to a solar lease’s. You must contact the solar company within the allowed cancellation period specified in the contract (around 3 days to a few weeks). If successful, you’ll be able to back out with zero or relatively minimal penalties.
Post-installation cancellation, on the other hand, requires you to buy out the entire solar system at its fair market value.
(Since a PPA is based on paying for energy usage (kWh) rather than a fixed monthly fee, there’s no simple way to cancel without settling the remaining value of the system.)
Once you buy out the system, the ownership transfers to you and you can either keep it for personal use or include it in the sale of your property.
How to Report Solar Scams
If you’ve been affected by a solar scam, or have spotted one, you can file a complaint online with one of the following agencies:
- State Licensing Agency
Each state has a licensing agency that oversees solar contractors. If violations are found based on your report, the agency may issue warnings, impose fines, or even revoke the contractor’s license.
- Attorney General’s Office
Your state’s Attorney General’s Office handles consumer complaints about businesses operating in the state. They can take legal action, look into patterns of fraud, or pursue a case against the company if necessary.
- Consumer Protection Agencies (e.g. BBB, FTC)
Agencies like the Better Business Bureau (BBB) and the Federal Trade Commission (FTC) don’t resolve individual complaints directly, but they track them to identify fraudulent practices.
Reporting through these channels can help lead to investigations and legal actions, and push companies to resolve issues quickly under the weight of public scrutiny.
Can I get a refund for any upfront costs if I cancel my solar installation?
If you cancel your solar installation during the cool off period, you’re likely to get a full refund for any upfront payments. But be sure to check your contract, as it may outline any cancellation costs or non-refundable admin fees.
If you cancel after the cool off period but before the installation or major work begins, cancellation fees will likely be higher and reduce your refund.
How to Check a Solar Company’s Reputation Before Signing A Contract
Making sure your solar company is trustworthy can save you from getting ripped off by scams or predatory tactics. Here are 3 things you can do to protect yourself:
- Do Your Research
Look into the company’s history and customer reviews. Check for any complaints, fraud allegations, or legal issues that have been filed with agencies like the Better Business Bureau (BBB). Talking with neighbors or locals may also give you additional insights.
- Look Out for Gimmicks
Watch out for red flags, such as those companies that make outrageous claims and rush you into signing a contract on the spot. A good solar company takes the time to walk you through the agreement, break down costs, and discuss your rights as a consumer.
- Get Competing Quotes
Reach out to other solar companies and compare their offers. This helps you establish a price baseline and identify companies that may be overcharging or underdelivering.
Compare Multiple Solar Quotes at Once
Avoiding a bad deal starts with comparing the right options, and Quote For Solar makes it easy by connecting you with reputable, pre-screened solar installers.
With just a single request, you’ll receive up to three quotes from trusted installers in our network. You can quickly compare multiple offers side by side and find the best prices – all without the hassle of contacting the companies yourself.
Request a solar quote today!
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