The rundown on solar contracts

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To buy or not buy solar

Maybe you’ve already figured out the cost of a solar power system and now you’re wondering if you should buy, lease, or get a PPA contract. Well, we will give you the lowdown on solar contracts so that you can make the best decision for your situation.

Make sure you’re dealing with a licensed contractor

It probably goes without saying, but you should always make sure you’re dealing with a licensed contractor with their license number clearly printed on the majority of their marketing materials. Before you hire a solar contractor, check the CSLB website to ensure that the solar contractor is in good standing with the board.

The contract should clearly state how much you’ll pay every year

A good contract should plainly layout the total costs and savings year after year. The main benefit of a solar system is to enjoy lower electricity rates. The contract should show how much money is due and when as well as expected repair costs, inspections, and any other fees that a solar system will entail. Some leases and PPA contracts include a payment escalation clause, so make sure to read the fine print and ask the contractor to go over all parts of the contract with you.

Solar leases and PPA contracts are low or no cost

If you’re low on cash but still want to get a solar system installed in your home, there are a lot of solar lease and PPA contracts available to get that solar system you’ve been dreaming about. Just like a car, leasing can be a good option for many people, but it isn’t always the best option. It will depend on your particular financial situation. The main benefit of a solar lease is the relatively low risk to the homeowner because the developer takes on the risk and costs of the installation. While most leases are transferrable upon selling a home, be aware that many house hunters are leary of taking on a lease that they did not get into themselves.

Only purchasing a solar system gets a tax refund

If part of what appeals to you about installing a solar system is the 30% tax refund, then you need to make sure that you purchase a solar system rather than lease one. When you lease a solar system, the developer gets the tax credit not the homeowner.

A Solar Loan may be a better option

Coming up with the down payment for a solar system can be daunting for some. Luckily, there are several solar loan programs available including California First Efficiency Financing. In addition, many financial institutions are now offering solar loans so you might be able to talk to your financial institution and get a loan through them.

Upgrades may not be possible with a lease

Most solar leases are for 15-20 year terms. These contracts do not usually include the ability to upgrade the system. With the pace at which technology is changing, having the ability to upgrade could mean substantial savings in the future.

If it isn’t in the contract, then it isn’t part of the deal

Maybe your sales rep sent you an email saying that they would replace the inverter free of charge or told you that there is hardly any maintenance required (both of which are not normally ever the case). At the end of the day, if any particular arrangement isn’t clearly stated in the contract, then chances are the company will probably not keep their end of the bargain. Service contracts are specific. If you end up in court (which usually doesn’t happen either because most contracts clearly state that arbitration is required), without the agreement included in the contract, you will not have any bargaining power and you will probably not get what was promised.



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