Canceling a solar lease: What you need to know

Solar leases and power purchase agreements (PPAs) have opened solar access to millions of homeowners who want immediate savings without the upfront investment of system ownership. Today's solar leasing market offers many competitive products with reasonable terms and genuine long-term value—a significant improvement from the contracts available five or 10 years ago.

Still, circumstances change. You might be moving, experiencing service issues, or simply reconsidering an older agreement that doesn't reflect today's better terms. Understanding your options for exiting a solar lease—or evaluating whether your current contract still serves you well—can save you thousands of dollars and considerable frustration. Whether you're stuck in a problematic agreement or just exploring your flexibility, knowing your rights and exit paths puts you in control of your solar investment.

Solar leases and PPAs can deliver solid value when structured fairly—most agreements save homeowners 10-30% compared to traditional utility rates while requiring no upfront investment or maintenance responsibilities. With the right provider, you get immediate electricity savings while keeping your capital available for other priorities.

However, several situations might lead you to reconsider your lease arrangement:

Annual rate increases are reducing your savings

Today's solar leasing market offers many competitive products with reasonable terms and genuine savings. However, if you entered into an agreement several years ago—or signed with a provider offering less favorable terms—you might find that annual rate increases are eating into your expected savings.

Most lease and PPA contracts include escalator clauses, annual rate increases typically ranging from 0-4%. These aren't inherently problematic when structured fairly. Many of today's best lease products feature low escalators (2% or less), which are significantly lower than historical utility rate trends, ensuring your savings remain strong throughout the contract term.

The concern arises with agreements that include escalators above 3%, particularly during periods of rapid utility rate changes. But, before concluding your lease is unfavorable, check your utility's current rates against your lease payment. With electricity rates increasing significantly in many markets—residential rates have jumped 32% since 2014, according to the EIA—even agreements with moderate escalators often still deliver solid savings. 

In most cases, you'll still save money even with an escalator, but if your agreement features particularly high annual increases, you might find your advantage has diminished.

You’re moving

Life rarely follows a 20-year timeline. If you're selling your home during your lease term, you have several options that don't necessarily require canceling:

• Transfer the lease to the new homeowner: Many buyers view solar as an attractive feature, especially if it delivers immediate savings on their utility bills. A well-structured lease with low escalators can actually enhance your home's appeal. However, the new homeowner will need to qualify with your leasing company, which typically involves a credit check.

• Buy out the remainder of the lease: You can pay off the remaining lease payments and either remove the system or leave it in place. This option can make sense if you're close to the end of your term and the new homeowners don’t want to take on the lease contract.

• Purchase the system at market value: Some contracts allow you to buy the system at its current fair market value and leave it on your roof as an owned system. This can increase your home's value, though you'll need to factor in the buyout cost against potential sale price benefits.

Talk to your leasing company early in the selling process to understand your specific options and any associated costs. Getting clarity upfront helps you price your home appropriately and avoid surprises during closing.

You have quality of service concerns

Another reason homeowners consider exiting a lease involves the ongoing service relationship with their provider. Large solar leasing companies vary widely in the quality of their customer service, with some receiving excellent reviews for responsiveness and others drawing complaints about delayed maintenance, billing confusion, or difficulty reaching representatives.

Since you'll work with your leasing company for decades, not just during installation, their service quality matters significantly. If you're experiencing persistent service issues, document everything—dates, representatives you've spoken with, specific problems, and attempted resolutions. This documentation becomes valuable if you need to escalate concerns or pursue legal options.

Here's the straightforward answer: Most solar lease contracts are extremely difficult to cancel without legal intervention. These agreements are structured as long-term commitments, typically 10-25 years, with strong contractual protections for the leasing company.

The challenging reality is that solar leasing companies invest substantial capital upfront to install systems, then recoup that investment, plus a profit, through your monthly payments over many years. Allowing easy cancellations would undermine their entire business model. As a result, lease contracts include extensive provisions that make early termination challenging and often costly.

In some cases, leases have even been tied to the property title rather than to you personally. This means the obligation transfers with the property—a structure that protects the leasing company but can create complications during home sales, as prospective buyers may inherit a lease agreement they didn't negotiate.

While this might sound discouraging, understanding these constraints upfront helps you make informed decisions about whether a lease is the right choice for your situation.

Even though outright cancellation is difficult, you typically have several alternatives:

Buyout provisions

Most solar leasing contracts include specific buyout options, though the terms vary significantly:

Early cancellation provisions

If you haven't had your system installed yet, you may still be within a penalty-free cancellation window. Most solar leasing companies offer 30 days after contract signing to cancel without penalty—though this period varies by provider and state regulations. Some states mandate longer cooling-off periods for home improvement contracts.

Additionally, many contracts include contingencies that allow cancellation under specific circumstances:

• Roof condition issues discovered during pre-installation inspection

• Permitting or interconnection problems that prevent installation

• Significant changes to your financial situation

• Property sale before installation (in some contracts)

These provisions vary widely, so review your specific contract language carefully.

Transfer to new homeowner

For homeowners who are moving, transferring the lease often provides the smoothest path forward. The new homeowner takes over all remaining lease obligations while enjoying the immediate electricity savings.

This option works best when:

• Your lease terms are competitive with current market rates

• The system is producing electricity as expected

• Your escalator is reasonable (2% or lower is generally attractive)

Be prepared to provide the new homeowner with system production history, current monthly costs, and projected savings to demonstrate the lease's value.

Prevention beats crisis management. Before signing any solar lease, protect yourself by understanding these critical elements:

The solar leasing market has matured considerably, and many of today's lease and PPA products offer competitive terms, reasonable escalators, and genuine long-term value. For homeowners who want immediate savings without upfront investment or maintenance responsibilities, these arrangements can make excellent sense—especially since they're currently the only residential solar projects that still qualify for federal tax credits, which providers should pass through as lower monthly rates.

That said, not all agreements deliver equal value. The difference between a well-structured lease and a problematic one can mean tens of thousands of dollars over the contract term. Before signing any solar agreement—whether it's a lease, PPA, or solar loan—take time to understand the terms thoroughly. Compare the escalator to your utility's historical rate increases, understand your buyout options, and research your provider's service reputation. If you're exploring all your options, our guide on how to pay for solar breaks down the trade-offs between cash purchases, loans, and third-party ownership.

Solar is a decades-long decision. The right financing choice depends on your specific priorities: maximizing long-term savings, preserving capital flexibility, avoiding maintenance responsibilities, or some combination. By understanding your options clearly and reading contracts carefully, you can choose an arrangement that aligns with your goals and circumstances.