5 questions to ask before signing a solar lease or PPA

The monthly number looks great. Then you read the fine print.

Solar leases, power purchase agreements (PPAs) and long loans can all lower what you pay upfront. That is real value. But the contract details decide whether you come out ahead, and those details are easy to miss when someone is showing you a low monthly payment.

Before you sign anything, ask these five questions.

1. Does the payment go up each year?

Many leases and PPAs include a yearly increase, often called an escalator. A small annual bump does not sound like much. Over 20 years, it adds up.

Ask for the exact increase in writing, and ask what your payment will be in year 10 and year 20. If the answer is vague, that is a warning sign.

2. How long is the contract?

Many solar contracts run 20 years or more. That is a long commitment, longer than most people stay in one home.

Make sure the term fits your plans. If you might move in 5 years, a 25-year contract becomes a problem for whoever buys your house.

3. What happens if I sell my home?

With a lease or PPA, the buyer usually has to agree to take over the contract. Some buyers are happy to. Others are not, and that can slow down a sale or force you to buy the system out.

Ask exactly how a transfer works, what it costs and what happens if the buyer says no.

4. What happens if the company goes out of business?

This is not a hypothetical question in Hawaii. Thousands of homeowners have solar systems whose installer closed or left the islands.

Ask who owns your contract if the company closes, who will service your system and who handles warranty claims. If no one can answer clearly, keep asking. SolarServe by Independent Energy Hawaii services systems from any installer, including orphaned ones.

5. Can I buy the system out early?

Plans change. Ask whether you can buy the system outright before the contract ends, when you can do it and how the price is calculated. Get it in writing.

How the total cost compares

The best way to compare financing is the total you will pay, not just the monthly payment. Here is an illustrative HSFCU example:

Illustration only, not a lender quote. Confirm the repayment schedule and fees with HSFCU. Subject to credit approval; rates and terms may change.

Compare the total paid, fees and repayment timing in actual lender disclosures. A shorter loan can reduce total interest, depending on its APR and fees.

Example only. All loans are subject to credit approval. Rates and terms may change.

What Independent Energy Hawaii offers

• Cash: the lowest total cost, with a typical payback of about 6 to 8 years.

• Participate Energy prepaid lease: about 30 percent less upfront, with a typical payback of about 4 to 6 years. It also works for battery-only installs.

• HSFCU solar loan: APR as low as 7.7%, 8-year term, up to $75,000, 0% APR and no payments for the first 18 months.

• HOCU solar loan: APR as low as 6.99%, 10-year term, up to $100,000, 0% APR and no payments for the first 24 months.

We do not offer PPAs.

Key takeaways

• Ask about yearly increases, contract length, home sales, company closures and buyout terms before you sign.

• Compare total cost, not monthly payment.

• Compare the total paid, fees and repayment timing in actual lender disclosures. A shorter loan can reduce total interest, depending on its APR and fees.

Independent Energy Hawaii will show you every option side by side, so you can see the real cost before you decide.

Participate Energy is an upfront prepaid lease, not a zero-down monthly lease. Ownership, maintenance, transfer and buyout terms depend on the agreement. IEH does not offer PPAs.