Solar Freedom Blog Post

Solar PPA Problems -- Why Power Purchase Agreements Are a Trap

Solar PPAs sound great in the sales pitch. Here is why they are the worst solar deal for most homeowners -- and how to get out of one.

Contract Types

The solar salesperson made the PPA sound perfect: no upfront cost, lower electric bills, clean energy. Here is what they did not tell you -- and why a Power Purchase Agreement may be the worst financial decision tied to your home.

A Power Purchase Agreement (PPA) is a contract where you do not own the solar panels on your roof -- a solar company does. They install the system at no upfront cost, and you agree to buy the electricity it produces at a set rate for 20-25 years. On paper, it sounds like a win. In practice, for many homeowners, it becomes one of the most financially damaging contracts they ever signed.

The Escalator Clause: The Hidden Bomb in Your PPA

Most solar PPAs include an annual rate escalator -- typically 2.9% per year. This means the price you pay per kilowatt-hour increases every single year for the life of the agreement. In year 1, you might pay $0.12/kWh. By year 10, you are paying $0.16/kWh. By year 20, you are paying $0.21/kWh. Meanwhile, utility rates may have stayed flat or even decreased in your area due to grid improvements and renewable energy mandates. The savings you were promised evaporate -- and in many cases, homeowners end up paying more than they would have with the utility.

2.9%

Typical annual PPA rate increase

20-25 yrs

Standard PPA contract length

$25K-$45K

Typical early buyout cost

67%

Buyers who reject PPA homes

You Do Not Own the System -- And That Is a Massive Problem

Because the solar company owns the panels, they are technically a tenant on your roof. This creates complications that most homeowners never anticipated: the company has the right to access your property to service the system, the lien on your home affects your ability to refinance, and when you try to sell, the buyer must either assume the PPA or you must buy it out. The system that was supposed to add value to your home is instead a liability that reduces your buyer pool and complicates every future financial transaction.

A solar PPA is recorded as a lien on your property title. This means it shows up in every title search, affects your ability to refinance, and must be resolved before any home sale can close.

What the Sales Rep Did Not Tell You

In our team's experience reviewing hundreds of PPA agreements, there are four things that are consistently not disclosed at the point of sale: the annual rate escalator and its long-term financial impact, the home sale transfer requirement and its effect on buyer pool, the refinancing complications caused by the property lien, and the actual buyout cost if you want to exit early. Failure to disclose any of these material facts is a deceptive trade practice under most state consumer protection laws -- and it is one of the primary legal grounds we use to cancel PPAs without a buyout fee.

How to Get Out of a Solar PPA

There are three paths out of a PPA: buy it out (expensive), transfer it to a buyer (difficult), or cancel it through legal grounds (the best option if available). Legal cancellation grounds for PPAs include failure to disclose material terms, TILA violations in the financing documents, deceptive trade practices, and unconscionable contract terms. Our team evaluates all three paths in a free contract review and recommend the one that minimizes your cost and timeline.

If your PPA sales rep never mentioned the annual rate escalator, the home sale transfer requirement, or the refinancing lien -- that non-disclosure may be your ticket to a $0 cancellation. Get a free contract review to find out.