Cancelling a solar lease contract: Finding ways out

Whether you're having second thoughts, facing money problems, or just realized leasing was a mistake, getting out of a solar lease contract may be much trickier than getting into it. Let's look at your options for canceling a solar lease.

Pre-installation window: When you can cancel without penalties

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Most solar lease agreements include a cooling-off period that typically lasts 3-30 days after signing the contract. During this window, you can cancel for any reason without penalty – it's essentially a no-questions-asked escape clause. This period exists because federal and state consumer protection laws recognize that major financial decisions deserve a second look.

If you're still within this window, review your contract immediately for the exact cancellation procedures. Most companies require written notice delivered via certified mail or email with delivery confirmation. Don't rely on a phone call – always get your cancellation request in writing and keep copies of everything. Some contracts extend this cooling-off period until the actual installation begins, giving you additional time to reconsider.

Post-installation options: When you need to pay

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Once your system is installed and operational, getting out of a solar lease becomes more complex and expensive. Yet you still have several options depending on your contract terms and financial situation. These do involve some financial cost, but can still be worthwhile if your situation has changed.

Solar lease buyout: Make panels yours

Your solar lease contract probably lets you buy the system outright and end the lease early. Companies calculate the buyout price by looking at what you still owe on the lease, then giving you some kind of discount that depends on how many years you have left.

Expect to pay anywhere from $10,000 to $40,000 to buy out your lease, depending on how big your system is and how much time is left on your contract. That's a lot of money upfront, but it can actually save you money if you're selling your house soon because most buyers would rather buy a home with owned solar panels instead of taking over someone else's lease payments.

Before pursuing a buyout, get the exact payoff amount in writing from your leasing company. Some companies calculate buyouts using complex formulas that include future energy production estimates and market value adjustments. Make sure you understand exactly what you're paying for and whether the buyout price is negotiable.

Market-value purchase: Make panels yours but cheaper

Some contracts let you buy the system for what it's actually worth today instead of the price written in your lease. This can save you serious money, especially if your panels are older and worth a lot less than when they were first installed.

The tricky part is figuring out what your system is really worth since solar equipment loses value fast and prices are different everywhere. You might need to pay an appraiser $300-$500 to tell you what it's worth, but that small cost could save you thousands if your panels are worth way less than your contract buyout price.

Market-value purchases work best for systems that are at least 5-7 years old, when the equipment has depreciated from its original installation cost. Newer systems may not offer much savings over the standard buyout option.

Solar lease transfer: Convince new homeowners

If you're selling your house, getting the buyer to take over your lease is usually the cheapest way out. Most solar companies will let you transfer the lease, but the new owner has to qualify based on their credit and income.

The transfer process takes about 1-2 months and the buyer needs to fill out an application and agree to take on your lease payments. Some companies charge $500 to $2,000 for the transfer, but that's still way cheaper than paying off the whole lease yourself.

Not every buyer wants to deal with lease payments, which can make selling your house harder. Some buyers might want you to lower your asking price instead of taking over the lease, so plan for that when you're setting your price. You could offer to pay the first year of lease payments yourself or cover the transfer fees to sweeten the deal.

Unforeseen expenses clause: Prove you have financial constraints

Many solar lease contracts let you cancel if you hit serious money problems that make the monthly payments impossible to afford. You'll need to prove your financial situation changed with paperwork like layoff notices, medical bills, or repair estimates for major house damage.

Things that usually qualify include losing your job or getting your hours cut, huge medical bills your insurance didn't cover, getting divorced, or major house damage like flooding or fire. The important thing is having documents that prove these problems weren't something you could have predicted when you signed up.

Alternatives: When you don't have to cancel

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Sometimes modifying your existing lease agreement is more practical than cancelling entirely. These alternatives can address many of the common problems that make homeowners want out of their solar leases.

System relocation: Take panels with you

If you're moving to a new house, you might be able to take your leased solar panels with you. This works best when you stay in the same area with the same electric company and your new house has good roof space and gets plenty of sunlight.

Moving your solar system usually costs between $3,000 and $8,000. The exact price depends on how big your system is and how hard it is to install at your new home. Even though this sounds expensive, it's often much cheaper than paying off your entire lease early, especially if you still have several years left on your contract.

Lease renegotiation: Get better terms

If your main problem is that you can't afford the payments rather than wanting to get rid of the solar panels completely, many solar companies will work with you to change your payment plan. They'd rather do this than deal with the hassle of ending your contract early. 

They might offer options like temporarily lowering your payments, making your lease longer with smaller monthly payments, or changing how much your payments go up each year. You'll have better luck getting new terms if you can show that you're really struggling financially or if your solar system isn't working as well as they promised. 

The key lesson is that solar lease cancellation is possible but often expensive. Your best strategy is to thoroughly research and understand all options before signing any solar agreement. If you're already locked into a problematic lease, focus on the alternatives that provide the most financial benefit for your specific situation, whether that's negotiating better terms, transferring the lease, or pursuing a strategic buyout that positions you for better solar financing in the future.

If not leasing, then what: Other ways to go solar

Knowing the real costs and benefits of different ways to pay for solar can help you make better decisions about whether to stick with your lease, buy it out, or pursue alternatives for future solar projects. Here are some other solar options to consider that might better match your situation.

Buying with cash

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If you have enough money saved up, buying solar panels outright usually gives you the best deal over time and lets you break even the fastest. After tax credits, most systems cost $10,000-$20,000 and start saving money immediately. Most people who pay cash get their money back in 5-8 years, then get free electricity for the rest of the system's life – which is usually 25+ more years. This can save you $30,000-$50,000 total.

Solar loans 

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Many banks offer special loans for solar panels with good interest rates – often 3-5% if you have good credit. This lets you get the benefits of owning your system like tax credits and higher home value, while making monthly payments similar to leasing, but you actually own something valuable when you're done paying. Most solar loans don't require any money down, let you pay over 5-20 years, and don't charge you extra if you pay them off early. Total cost runs $25,000-$35,000, and once it's paid off you get free electricity for another 10-15 years.

Solar power purchase agreements

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Solar power purchase agreements: Sun without spending

Power purchase agreements work like leases but with one big difference: instead of paying the same amount every month, you only pay for the electricity your solar panels actually make. This can be better if you're worried about whether your system will work well, since you only pay for the power you actually get. PPAs usually charge less than what your electric company charges, though you might not save as much money as with other options.

Community solar participation

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Community solar: Shared sunshine

In some places, you can sign up for a piece of a big solar farm built somewhere else. You get credits on your utility bill without putting any solar panels on your own home. This is great for people who rent, have roofs that won't work for solar, or live in areas with too much shade from trees. You don't have to pay anything upfront, and you can usually cancel much faster than with other solar deals. People who sign up typically save 5-15% on their electricity bills. 

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Julia Zaraeva

Author

Years of experience in translation and a love of nature help Julia find the right words to encourage going solar. She joined the team in 2023 and is happy to make her contribution to a greener future.

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