Leasing solar panels is the worst way to go solar, and one of the largest solar panel leasing companies in Florida has some egregious terms that will come back to haunt consumers who enter into these shady contracts. We were contacted by a client in LaBelle who was concerned about their solar panel performance, and it led me to the contract, which was freely available on Hendry County’s permitting website.
Some of the terms of the lease will shock you. The following information is not intended to be legal advice, and is based on this single lease agreement that we reviewed. But we have seen many solar lease agreements from various solar leasing companies, and they all have at least some of these terrible features.
The Shady Truth Behind This Solar Lease Agreement: What Homeowners Need to Know
Solar energy promises freedom from high utility bills — but for homeowners who sign lease agreements like the one offered to the client that contacted me, that dream can quickly turn into a financial nightmare. After reviewing the 25-year lease contract, it’s clear that it’s designed to lock homeowners into a long-term commitment that benefits the leasing company far more than it does the customer.
Here are the biggest traps and pitfalls buried in the fine print:
1. The Annual Escalation Clause: A Sneaky Price Hike Every Year
One of the most insidious aspects of this lease is the annual price escalation. While your lease payment starts at a fixed rate, it increases every year by a set percentage — often around 2.9% per year, as in the contract we reviewed.
Here’s why that’s a big problem:
- Your energy production stays flat or declines — but your payments keep rising.
- Over time, you’ll be paying significantly more each month for the same or less electricity.
- In the later years of the lease, your monthly payment could easily exceed the value of the energy produced, meaning you would be losing money every month.
This turns what may look like essentially a break-even proposition in year one into a financial loser by year ten and a money pit by year twenty.
Check out how the payments will increase over time. Even though the system will produce less energy as time goes on, your payments keep going up. These increases are not tied to inflation or actual utility electricity costs. The escalation factor is fixed, regardless of what utility rates do in the future! The lease payment really gains momentum because the escalation factor is compounded over time.
The monthly lease payment doubles by year 25!
2. You Don’t Own the System — You Just Rent It for 25 Years
You are not building equity in the solar system. It remains the lessor’s property the entire time, unless you buy it later — and only after 66 months — for a “fair market value” that presumably they determine. You’re essentially trading your utility bill for a long-term lease obligation, without any of the asset ownership that would make solar a wise investment.
You might prefer the death they are referring to if you decide you want to get out of the lease! What does the value of electricity have to do with the fair market value of solar panels? Nothing! These are not valid methods to value a solar energy system during it’s service life.
Unlike a car lease, they do not tell you the dollar amount for which you can purchase the system at a later date. This nebulous amount puts you at great risk.
3. They Keep All the Incentives and Tax Credits
The leasing company claims ownership of all federal tax credits, state rebates, and solar renewable energy credits (SRECs). These incentives amount to thousands of dollars — money that would go directly into your pocket if you owned the system. Under this lease, it goes to the leasing company. In Florida, only the Federal Tax Credit applies, but this is 30% of the system price.
The Federal Tax Credit is what makes solar leases attractive to the financiers who offer them. It’s the whole reason that leases exist.
But wait – there’s more. If you want to make your blood boil, continue reading. We don’t know what value the leasing company is putting on the system when they claim a tax credit from us taxpayers, but there is speculation that leasing companies use the sum of all lease payments as the basis for the tax credit. If that is true, they would be getting refunded by taxpayers not only for the solar panels, but for the imputed interest they are charging on the system.
Side note: Traditional solar loans also take advantage of the taxpayer in this manner, because buyers can include the dealer fees that banks charge in their initial cost of the system, inflating the tax credit and unfairly penalizing taxpayers. If you pay cash for a system, or use a no dealer fee lender, the tax credit is far lower and taxpayers aren’t on the hook for 30% of the profit the banks make.
4. You’re Still Paying a Utility Bill — So Where Are the Savings?
The leasing company is not your utility company. They’re simply leasing you the panels. In Florida, it is illegal to sell electricity unless you are a utility company, so the way lenders get around this is with a lease rather than a Power Purchase Agreement, which has made solar popular in other states. You still stay connected to the grid.
So you’re trading one bill (your utility) for two:
- A utility bill for any shortfall
- A lease payment that increases annually
The sales pitch often implies savings, but the numbers rarely work out that way. Any initial savings are likely erased by the annual lease escalator. By year ten, many homeowners are likely to end up paying more for their solar lease than the value of the electricity the system produces.
This leasing company does offer a “production guarantee” — but read the fine print. Their guarantee allows the system to degrade at a rate much higher than the actual warranted degradation of the solar panels themselves.
Most modern solar panels are warranted by their manufacturers to degrade at 0.5% per year or less, meaning they should still produce over 87% of their rated power after 25 years. However, this lease’s production guarantee assumes a significantly steeper decline, allowing them to promise far less output over time while still technically “meeting” their guarantee. In fact, they are only guaranteeing 51% of the year 1 energy production in year 25, despite the panels being warranted for around 90% of the initial output at that time!
This makes it easier for them to avoid issuing refunds — and much harder for you to hold them accountable.
6. Trying to Sell Your Home? This Lease Will Haunt You
Selling your home becomes a complicated mess. The buyer must either:
- Qualify under the lessor’s credit requirements, and
- Willingly assume your 25-year lease contract (with the bloated escalator clause and useless production guarantee)…
…or you’ll be in default. That means you could owe:
- The remaining value of the lease (“Make Whole” payment)
- The fair market value of the system
- Reimbursement of tax credits the leasing company received
This can derail a home sale or force you to pay thousands just to walk away.
7. You Waive Your Legal Rights — Seriously
If anything goes wrong, you can’t take them to court. The contract includes a mandatory arbitration clause, strips away your right to participate in class action lawsuits, and requires you to handle disputes through a process designed to favor the company.
8. Roof Replacement
If you need a new roof in the future, due to wear and tear or damage, you can only use the leasing company to remove and reinstall your solar panels, and that will be chargeable at whatever ther say it costs. They can approve, at their sole discretion, what contractors are allowed to perform maintenance. You cannot get competitive quotes and get the best value without the leasing company’s consent. And if you don’t put the solar panel back up within 30 days, they can start charging you a daily fee!
9. Upgrades, Modifications, Additions
Imagine a scenario where you decide you want to add more solar panels. Sorry – you are not allowed to modify the system. What about adding batteries for backup purposes to your leased solar panels? Nope – you can’t do that, either. In fact, this client was denied adding batteries because it would be a “modification.”
Technically, this Enphase system could easily be upgraded to add Enphase batteries without impacting the leased solar panels’ ability to produce energy. This could be done by the leasing company or another solar contractor. However, the leasing company is able to lock down the monitoring and control system, which precludes a third party from adding Enphase batteries. If the leasing company refuses to upgrade your system, you don’t have any options.
There are ways around this using batteries from other manufacturers. For example, you could AC Couple the output of the Enphase system to a Tesla Powerwall 3 or other hybrid inverter that allows this interconnection method. It would technically work, and the leasing company would probably never know about it. But it would be a “modification” of the solar energy system by the letter of the law, so it could put you at risk of breaching the lease terms.
But take it one step further. What if you wanted to add a generator, or even upgrade your home’s electrical service to be able to add an Electric Vehicle charger? These changes would likely require the interconnection point of the solar panels to change, which would constitute a modification, putting you in breach of the lease terms. It is a de facto usurping of ownership of your home’s electrical system. Your rights to upgrade, modify, or add to your home in ways completely unrelated to the solar panels are severely eroded when you sign a solar lease.
Final Thought: Solar Leasing Isn’t Always the Win You Think It Is
Leasing solar can seem attractive — especially with the no-money-down pitch by a slick salesperson. But this solar lease buries homeowners under a mountain of one-sided terms:
- A 25-year obligation with no equity.
- A yearly price hike that outpaces energy savings.
- A production guarantee that’s based on inflated degradation.
- Legal traps that limit your recourse.
- Little to no financial upside for you, and possible financial calamity.
There are far better ways to go solar. A cash purchase is best if you can afford it. This system could have been purchased by the lessee for literally HALF of the lease payments that will be made over the 25-year lifespan. A no-dealer-fee solar loan is the next best option because it allows you to purchase a system for the same price as cash, so you are not automatically upside down on day 1, and they offer competitive interest rates over long terms to keep payments low. A HELOC, or a fixed-rate personal loan, where you own the system, keep the tax credit, and enjoy all the upside is an option. Even a traditional solar loan, with inflated dealer fees to buy down the interest rate, is a better option than a lease because you own the system and have greater flexibility.
A lease is not a scam, per se. The terms of the lease are all there in black and white (and blue in the case of this company’s lease document). But a lease is a one-sided win for the financier, and an almost automatic loss for the lessee. Do not get bamboozled by a convincing salesperson, even if they are a “nice person,” or even a neighbor. We hear that all the time, because these leasing companies recruit people to farm for clients in their own backyard.
