How to Get Out of a Solar PPA: Rates, Escalators, and Exit Terms

How do you get out of a solar PPA?

You get out of a solar PPA through the exit terms written into the agreement (a buyout or prepayment, a transfer to the buyer when you sell, or an early termination charge) or through a dispute when the provider failed to deliver or misled you about the rate. If you signed in the last few days, a cancellation window under your contract or state law may still be open. None of it is automatic: it turns on the contract, the dates, your state and the facts.

What staying costs comes down to two numbers in your agreement, the per-kilowatt-hour rate and the escalator, so work those out before you price any exit. For cancellation windows and the exits leases and PPAs share, see how to cancel a solar lease or PPA.

How is a PPA different from a lease?

A power purchase agreement (PPA) is a contract to buy the electricity from a solar system that a company owns on your roof, at a per-kilowatt-hour price the contract sets. The FTC draws the line this way: “Unlike leases, you’re not paying to use the system, and you don’t automatically get all the power it produces. Instead, you’re buying the power the system generates, at a price the PPA provider sets.” The EPA calls it “a performance-based arrangement in which the host customer pays only for what the system produces.”

The California Public Utilities Commission’s 2022 consumer guide says the contract “will specify the kilowatt-hour rate you pay in the first year and every year after that,” so that rate schedule is the page to find. Treasury’s PPA guide gives the first test: “Check your current utility bill for the cost per kilowatt-hour and compare it to the cost shown on the PPA.”

How do PPA escalators work?

A PPA escalator is a clause that raises your per-kilowatt-hour rate by a set percentage each year. The CFPB’s solar financing spotlight says some PPA rates stay fixed for the whole agreement, while others carry escalators that “range from 1 to 5 percent,” a range it took from the EPA. The EPA says escalators account for “system efficiency decreases as the system ages,” rising operating costs and “anticipated increases in the price of grid-delivered electricity.” California’s regulator puts typical lease and PPA escalators at 1 percent to 3 percent a year and adds: “Be cautious of entering into a contract with an escalator higher than that.”

Here is what compounding does to a hypothetical starting rate of 15 cents per kilowatt-hour. The arithmetic is ours.

Annual escalator	Rate in year 10	Rate in year 20	Year 20 vs. year 1
None (fixed)	15.0 cents	15.0 cents	same
1%	16.4 cents	18.1 cents	21% higher
3%	19.6 cents	26.3 cents	75% higher
5%	23.3 cents	37.9 cents	153% higher

Your savings in any year depend on the gap between the PPA rate and your utility’s rate, which narrows whenever your escalator outpaces the utility’s increases, and the FTC notes that “it’s hard to predict future utility rates because they can be affected by many factors.” Treasury’s PPA guide tells signers to “Look for descriptions of how the PPA costs can change in the future.” A bankruptcy doesn’t pause the escalator either: SunStrong Management, which now services most former Sunnova systems, tells customers their terms are unchanged “aside from any previously expected escalators noted in your contract and/or changes to sales tax.” Put your remaining years through the cost calculator.

What does production mean for your bill?

Because a PPA typically bills for output, production is the number your PPA bill is built on. A system that produces less sends you a smaller PPA bill and a bigger utility bill, so a shortfall can wipe out the savings you were sold while the PPA bill itself looks fine. Panels lose some output each year: NREL’s review of measured degradation rates found “a median value of 0.5%/year.” With an escalator, you pay a little more for each kilowatt-hour as the system makes slightly fewer of them, which is one reason the EPA gives for escalators.

A production guarantee is a contract promise that the system will produce a minimum amount of energy, with a stated payment if it falls short. California’s regulator says minimum energy guarantees are “common with leases and power purchase agreements” and tells buyers to ask how they will be compensated for a shortfall. Treasury’s advisory tells signers to check how “the company will pay if the system doesn’t produce the minimum amount of power.”

You need the data to check either one. SunStrong’s help center prices premium monitoring for former SunPower customers at $9.99 a month and says lease customers get it at no cost. Ask your provider in writing what production data your PPA entitles you to, and keep monthly records. See solar panels not producing promised energy.

How do you dispute a PPA?

Cost: postage and time.

A PPA dispute can rest on billing for power the system didn’t produce, a system that was never switched on, a rate or escalator different from the one you were told, a production guarantee the provider won’t honor, or a savings or tax-credit promise the contract contradicts. Treasury’s PPA guide flags two pitches. On tax credits: “With a PPA, you don’t own the system, so that claim is a lie.” On savings: “Don’t believe anyone who says that the PPA is guaranteed to lead to energy savings or eliminate your energy bills.”

Keep a disappointing result separate from a misrepresentation. Savings that shrank because utility rates moved differently is a bad outcome; a rate, escalator or guarantee your paperwork contradicts is a claim to put in writing. Keep the agreement and rate schedule, the proposal and production estimate, monitoring data, utility bills and every message (what to keep).

Write to the provider and whoever bills you, say what you want and ask for a written answer. Two federal rules homeowners rely on elsewhere don’t clearly reach PPAs: no agency has applied the Holder Rule to them (on a loan, it caps recovery from the lender at “amounts paid by the debtor”), and no agency has said the Cooling-Off Rule covers them. Complaints still count. The CFPB’s product list doesn’t include PPAs, so file with your state attorney general and the FTC at ReportFraud.ftc.gov; Treasury also points to your state’s utility consumer advocate. Its PPA guide says: “If you have lost money to a clean energy scam involving fraud, discrimination, or other unfair, deceptive, or abusive practices, federal and state agencies can help.”

When should you get a free case review?

Disclosure: Candid Yak works with Titan Advocacy Group, a solar consumer advocacy firm, and may be paid when readers hire it.

If the provider refuses in writing and your agreement, proposal and messages don’t match what you were promised, a free case review from an attorney-backed firm is the route worth taking. A firm offering one looks at the rate schedule, the escalator, the production terms and the sales record for a state deceptive-practices or contract claim, and where one exists, an attorney licensed in your state takes it up with the provider. A firm worth hiring:

• reviews your agreement before it names a fee, and says so if a cancellation window, written demand or complaint is still available to you;
• tells you which attorney will handle the file, licensed in your state and searchable with the state bar;
• gives you its fee in writing, including what happens to it if the provider says no, before you pay;
• never tells you to stop paying your PPA;
• never promises an outcome and never claims ties to your installer or PPA provider.

Who it works for: PPA holders refused in writing whose documents contradict the pitch. What disqualifies you: an open cancellation window or an agreement that matches what you were told.

How do PPA buyouts and transfers work?

Buyout or prepayment

Cost: the price or formula in your agreement.

Treasury’s PPA guide is blunt about the end of the term: “At the end of your PPA contract you will not automatically own the system. You will need to purchase it from the company at ‘fair market value.’” Before then, a buyout or prepayment follows your agreement’s formula. Ask for the figure in writing, how it was calculated and whether it credits payments already made, then compare it with what staying costs: expected production times the escalated rate, for each year left. Our buyout page walks through the math.

Who it works for: owners who plan to stay and have the cash. What disqualifies you: a price above what the remaining years would cost.

Transfer to a buyer

Cost: any transfer fee your agreement sets.

The FTC tells PPA holders to check: “Are you allowed to transfer the contract to the buyer? Do you have to send the company written notice before you transfer the contract?” California’s 2022 guide adds “What happens if the home buyer doesn’t want the solar system or doesn’t qualify to take on my lease, PPA, or PACE-financed system?” and “Are there fees for transferring the lease, PPA, or PACE financing to a new homeowner?”

A PPA can sit more lightly on a buyer’s mortgage than a lease. Fannie Mae says payments under a power purchase agreement “calculated solely based on the energy produced may be excluded from the DTI ratio,” while lease payments generally count. Fannie gives the panels no value in the appraisal. Start with the provider well before closing, and see selling a house with a solar lease or PPA.

Who it works for: sellers whose buyer will take the contract. What disqualifies you: a buyer who won’t or can’t qualify.

Early termination

Cost: the charge your agreement names. California’s guide tells buyers to ask, “Are there fees if I need to terminate the contract early to sell my house?” Get the figure in writing, and see our breakdown of cancellation fees.

What if you stop paying the PPA?

Missing payments leaves the agreement in force and triggers its default terms. When Sunnova handed servicing to SunStrong, it told customers “Your payment arrangements remain the same.” Get professional advice before you change a payment, and read what happens if you stop paying.

The order for a PPA

1. Inside a cancellation window? Cancel in writing now, by the method your agreement and the law require, and send a copy the same day to the PPA provider and any lender if they differ from the installer.
2. Identify your contract and every company: confirm it’s a PPA, then name the installer, the owner, the servicer and the warranty provider.
3. Ask in writing, and complain for free. Get the provider’s answer in writing, then file: Treasury, the CFPB and the FTC “encourage consumers that believe they have been a victim of unfair or deceptive practices to file a complaint with CFPB, FTC, or their relevant state consumer protection office.”
4. If they refuse, and your documents show a gap between what you were promised and what you signed, get a free case review from an attorney-backed firm.
5. Other routes: buyout or prepayment, transfer to a buyer, or early termination on the agreement’s terms.

Disclosure: Candid Yak works with Titan Advocacy Group, a solar consumer advocacy firm, and may be paid when readers hire it. This page’s author, Kira Fairbank, is a manager at Vacation Ownership Consultants, a timeshare exit firm.

This is general information, not legal advice. What a PPA lets you do turns on its rate schedule, its exit clauses and your state’s law, so have an attorney licensed in your state read the agreement before you send a notice, accept a buyout figure, sign a release or change any payment.