Chapter 6: Understanding Solar Contracts and Agreements
Solar contracts can be packed with industry jargon and legal fine print—and unfortunately, that’s where some homeowners end up confused or misled. At SolarShip, we believe you deserve to understand every part of what you’re signing—so you can feel confident, protected, and in control.
In this lesson, we’ll walk you through the key terms and conditions you’re likely to see in solar contracts—whether you’re leasing, buying, or signing a PPA—so you know what to look for, what to ask about, and what to avoid.
IN THIS LESSON
Key Terms You Need to Understand in Any Solar Agreement
8 Key Terms to Watch For
1. System Ownership
What to look for: Who owns the panels—you or the solar company?
If it’s you, you get all the incentives directly.
If it’s the solar provider, they get the tax credits and incorporate that into your lower monthly payment (lease or PPA).
Always verify ownership before signing.
5. Cancellation Policy
What to look for: What are the terms and options to cancel after signing
Some companies have fines for canceling after signing, others allow cancellation at any time prior to install with no penalty
Be sure you understand your options and, if applicable, associated costs of cancelling
2. Length of Agreement
What to look for: How long is the contract, and what happens at the end?
Lease and PPA terms typically last 20–25 years
Loan terms range from 5–25 years
Find out about automatic renewals and buyout options
Ask about the process for transferring the contract if you sell your house.
6. Warranties
What to look for: What parts and work are covered, and for how long?
Equipment (Panels, inverters, etc) : Usually 20–25 years
Workmanship or labor: Varies by installer
Look for a written warranty section and request clarification on any vague terms
3. Escalator Clause
What to look for: Does your monthly payment increase over time?
Leases or PPAs have a 0–3% annual price increase
This can front load savings, a yearly escalator means lower monthly payments for about the first 10 years and a higher payment later on. Choose the option that best fits your financial goals.
7. Monitoring Access
What to look for: Can you track your solar system’s performance?
Most modern systems come with a monitoring app or portal
Confirm that you will have access and that it’s included at no extra cost
Transparency builds trust—and lets you catch issues early
4. Performance Guarantee
What to look for: Does the provider guarantee energy production?
Some companies offer guaranteed output and reimbursement if the system underperforms
Be sure the guarantee metrics are clearly defined
Understand how performance is measured and reported
8. Net Metering & Utility Integration
What to look for: How does your system interact with the grid and your utility?
Understand how excess energy is credited to you
Ask how net metering works in your area—and how it may change over time
Clarity on this helps you understand your true monthly savings
Key Takeaway:
Solar contracts should empower you—not confuse you. By understanding the key terms and asking the right questions, you’ll protect your investment and ensure your solar journey is smooth, transparent, and beneficial for years to come.
If something in a contract doesn’t make sense, don’t sign until it does.
Confused by Contract Fine Print? Let Us Translate It For You
We’ll help you review any solar contract—whether it’s ours or not—and break it down in plain English so you can move forward with confidence.
➡️ Get a free, no-pressure contract walkthrough with a SolarShip specialist.