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What Happens At The End Of A Solar Lease?

The words "End Of Solar Lease" over an image of a solar installer removing solar panels at the end of a solar lease, representing the pros and cons of renewing, buying out, or ending your agreement when it's time to decide on a new solar lease or power purchase agreement (PPA).
PublishedMarch 17, 2023
UpdatedMay 17, 2024
AuthorCory O'Brien HeadshotCory O'BrienSenior Director - Growth MarketingEditorRyan Barnett HeadshotRyan BarnettSVP, Policy & New Market Development
In this article
01.
Post-Lease Solar Panel Removal
02.
Renewing a Solar Lease
03.
Buying Out a Solar Lease
04.
Early Termination of a Solar Lease
05.
The End of Solar Leases vs. Power Purchase Agreements
06.
End of Solar Lease Options

As an alternative to system ownership or financing options, solar leases can provide customers with 20 to 25 years of renewable power and are designed to match the long operating lifespan of modern solar panels.

When comparing the different ways you can go solar, leasing panels is a great way to “rent” your equipment for multiple decades of guaranteed monthly savings, with little to no upfront costs.

But after those 20 to 25 years, you might be wondering… What happens at the end of a home solar lease?

This article will skip to the end of a typical solar lease and illustrate what it could look like when you renew, buy out, or end your renewable power agreement, and the pros and cons of each option.

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Post-Lease Solar Panel Removal

The most important thing to remember about a solar lease is that the company that originally installed the panels (or occasionally a third party) will maintain ownership of the equipment while producing emission-free electricity on your property.

While you are renting the panels and benefiting from the power they produce, the solar developer has the responsibility of keeping their solar panel systems up and running.

Therefore, when it’s time to call it quits and remove or replace your solar panels, the company that owns the equipment will be responsible for decommissioning your installed solar energy system.

It is unlikely that a crew will be there to uninstall your solar on the very day your lease has expired, so there may be a delay between your lease termination date and the physical removal of your photovoltaic (PV) system components.

To safely disconnect your electrical equipment and mitigate any potential property damage, working with a licensed, professional company to install and decommission your system is strongly recommended to maximize the value of your solar power investment.

Renewing a Solar Lease

Over multiple decades of renewable power production, solar panels slowly lose efficiency as they age. After 25 years of daily electricity generation, it may be time to consider a new set of panels to maximize your property’s power potential.

When you choose to renew a solar lease, your installer will take down your existing panels and replace them with the latest and greatest equipment that money can buy. By extending your energy savings for the next few decades, renewing a solar lease is an excellent way to keep a good thing going with new equipment.

Depending on the terms of your agreement, it may also be possible to renew your solar lease without having new panels immediately installed.

As solar panels can generate electricity for three decades and more, renewing your lease for another few years can allow you to “squeeze out all of the juice” of your existing equipment. With your solar panels now operating at lower efficiency levels, you may be able to extend your lease in annual or multi-year increments at reduced monthly rates.

Buying Out a Solar Lease

To end monthly payments altogether and still maintain a green-powered home, some solar companies will allow you to “buy out” a solar lease agreement before or after the end of the total contract period.

Offered in the agreement’s “solar lease buyout clause,” many PV installers give customers a chance to purchase the solar panels at a price that is based on the estimated present value of the system at any point within their lease.

Buying out an existing solar lease can be an important part of getting ready to sell your home with solar panels since you can bundle the cost of the system in with the cost of the house, which is why most companies offer a lease buy-out option.

As the new owner of the system, you can then eliminate your monthly lease payments while the panels continue to produce solar power and earn credit on your electric bill.

Purchasing your equipment can be a very valuable investment, however, it is important to consider that buying out a solar lease may cause you to inherit the responsibility of maintenance and decommissioning.

Knowing this, there is a chance that you would need to hire a professional contractor to remove your equipment at the end of your panel’s operating lifespan in a solar lease buyout.

Early Termination of a Solar Lease

Whenever you go solar, you are making a long-term commitment to reduce your energy costs and environmental impact. That’s why it can be sometimes complicated or costly to end a solar lease prematurely without an equipment buyout.

Canceling a solar lease early is typically not included as an option in most contracts. While it may be slightly easier to get out of a solar lease before the equipment is installed onsite, canceling becomes even more difficult for lessees once a system is up and running.

Even if your installer allows for contract breaks in a lease agreement, they will still need to visit your property and decommission the system. As such, you will more than likely be charged an early termination fee in the event of a contract cancellation.

The End of Solar Leases vs. Power Purchase Agreements

Viewed as alternatives to system ownership, solar leases and solar power purchase agreements (PPAs) are nearly identical solar lease contracts with a few minor structural differences. The main difference is that a solar lease allows you to pay for the panels, while a solar PPA allows you to pay for the power those panels produce.

Both PPAs and solar leases offer a chance to install panels with little to no money upfront, leverage the solar tax credit to reduce your payments, and aim to reduce energy costs for homeowners over long periods of time.

So if you are considering a solar power purchase agreement, the ability to renew a PPA, buy out a PPA, or cancel a PPA is very similar to that of a solar lease, with options heavily dependent on the terms outlined in your solar lease contract.

End of Solar Lease Options

When your solar lease is up, you may be able to choose from one of several contractual options to maximize the value of your renewable energy agreement.

Option Description
End a Solar Lease Your solar panels will be removed by the installer without any damage to your roof or extra costs added.
Renew a Solar Lease (Short Term) Your lease will be extended for the usable life of your solar panels in small increments of time, typically one to five years.
Total Lease Renewal and Panel Replacement Your lease will be renewed for another full term of 20 or 25 years after a new set of solar panels is installed.
Buyout a Solar Lease You purchase your solar equipment system outright to gain ownership of the system and its power production.

Even though the end of your potential solar lease may be decades from today, it is always best to know what options you will have at the conclusion of your contract before you sign an agreement.

When you work with Palmetto, you can speak directly to a solar expert to explore your leasing options, estimate your energy savings, and develop a plan for long-term success. Get started today with a free solar design and estimate tool to preview how a solar power system will perform on your property.

See how much you can save by going solar with Palmetto

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About the AuthorCory O'Brien HeadshotCory O'BrienSenior Director - Growth Marketing

Cory brings over 8 years of solar expertise to Palmetto, and enjoys sharing that knowledge with others looking to improve their carbon footprint. A dog lover residing in Asheville, NC with his wife, Cory graduated from UCSB. If you run into him, ask him about the company he founded to rate and review beer!

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