What should you know about solar power contracts?

Solar energy systems can offer significant benefits, including reduced energy costs and a lower environmental impact, but the contractual aspects of such arrangements can be complex. As such, there are several key points that anyone considering a solar contract should be aware of before signing.

These considerations can help to ensure that an agreement meets your expectations and needs. You must be fully informed about the responsibilities, costs and potential risks involved in order to better safeguard your interests moving forward.

Understanding the different types of solar contracts

There are various kinds of solar contracts, including solar leases, power purchase agreements (PPAs) and outright purchase agreements. Each type comes with its own set of terms and conditions.

  • Solar lease: You pay a fixed monthly rent for the solar system
  • PPA: You pay for the electricity generated by the system at a set per-kWh rate
  • Outright purchase: You buy the system outright with cash or through financing

Understanding the differences and implications of each type is critical to choosing the best option for your situation.

Costs and financial implications

Carefully review all financial aspects of the contract, including installation costs, maintenance fees and any hidden charges. If you’re entering a lease or PPA, understand the payment structure and any escalator clauses that may increase payments over time. Also, consider how the contract might affect your eligibility for government incentives, rebates and tax credits for solar energy use.

Warranty and maintenance responsibilities

Check what warranties are offered on the equipment and workmanship. Understand who is responsible for maintenance and repairs during the contract term. Some contracts may include maintenance services, while others may place the responsibility on the homeowner.

System performance and output guarantees

Look for any guarantees regarding the performance or energy output of the solar system. These guarantees can assure that the system will produce a certain amount of electricity, which is crucial for calculating your expected energy savings.

Termination clauses and moving considerations

Understand the terms regarding contract termination, including any penalties or fees for early termination. If you plan to move before the end of the contract term, check how the contract addresses this situation. Some agreements allow for transferring the contract to the new homeowner, while others may require you to pay the remaining balance.

Having a legal representative review a contract before you sign it is critical. This will help to ensure that you understand exactly what you’re agreeing to, including your rights and responsibilities under the law per the terms of the agreement. When it comes to contract drafting, knowledge is power.