Questions to ask about leases and power purchase agreements

Questions to ask about leases and power purchase agreements

• Does the agreement include all the relevant components of the SEIA Transaction Disclosures? (SEIA is the national solar industry association)
• What is the term of the agreement?
• What is the cost of energy ($/kWh) in the agreement or the monthly payment?
• What assumption does the proposal use to project how much my utility electricity costs will go up over time? (The assumption is usually based on 10- or 20-year historic information but can vary by provider and even by proposal. The higher the assumed rate of increase, the better the economics will look in the proposal.)
• Is there an escalator for my monthly payments? In other words, will my monthly payment for the PPA go up during the life of the agreement? If so, by how much and how often? If payment goes up over time, the cost of electricity from your utility must go up at a higher rate than your solar payment for you to save money with the solar system.
• What are my options if I decide to sell my house before the agreement ends? Options typically include: the new owner assumes the contract, you buy out the contract, or the company moves your system to your new home if you are moving nearby and the new home is a good fit for solar.
• What are my options when the agreement ends? Options typically include purchase the system at fair market value, extend the life of your PPA or lease, or have the installer remove the panels from the roof.
• How long are roof penetrations warrantied? [Why this is important: because an installation warranty describes how long an installer’s work is covered against problems encountered due to the act of installing components on the home (e.g., roof leaks). You should determine if your agreement covers that for the entire term or for a shorter period.]
• Will there be a cost to remove and replace the panels [and what is it] if I need a new roof or a roof repair in the future
• Will system components be covered for the life of the term or just for the manufacturer’s warranty length? What additional costs apply if equipment should fail after warranties expire? The industry standard is to cover all maintenance and repairs during the life of the agreement. [Why this is important: because equipment warranties can range from 10 to 25 years. If you have a 20-year term on your agreement but the inverter (for example) is covered for 10 years, what happens in year 11 if it fails? Do you incur additional charges?]
• Is additional insurance coverage provided by the company as part of the agreement?
• Will I still pay monthly for my leased system if the system stops functioning? [Why this is important: if your system has an error and stops producing electricity for a time, you won’t be saving on utility electricity costs during that period. For short periods, that’s okay. For longer periods, you may still be making monthly payments to the company but not receiving the electricity savings benefits.]
• If your system has a battery, how will you benefit, besides continued power during outages? Does the system owner use that battery to provide services to the grid? What percentage of your battery storage will be retained for your use? What compensation will customer receive for services provided by battery to the grid?