How to Get Out of a Solar Panel Contract

Are you stuck in a solar panel contract? Are you frustrated with your solar provider and wish for a way out? We’ve got just the article for you.

Broken promises and unreliable solar equipment are the top reasons for frustration among solar energy consumers. While the customer reserves the right to end a solar panel contract, not many people know how to navigate the process.

This article will discuss how to get out of a solar panel contract. We’ll outline why you may want to end your solar panel contract.

But before we get into all that, let’s look at some common terms used in solar panel contracts.

Understanding Your Solar Panel Contract

Solar panel contracts are legal documents. And as such, they may use many technical terminologies.

Getting out of a solar panel contract involves a lot of negotiating. You’ll need to study your solar panel contract to negotiate effectively.

Below are definitions of common terms used in solar panel contracts:

Solar Panel System

Includes all the components that generate and process solar power. It includes solar panels, charge controllers, inverters, and battery packs.

Power Purchase Agreement (PPA)

A Power Purchase Agreement is a solar leasing contract. It allows you to buy the power generated by a solar panel system.

Instead of paying fixed monthly fees, you’ll be paying based on the power generated by the solar panels. In PPA plans, the solar provider retains ownership of the solar panel system.

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System Size

System size refers to the number and overall capacity of your solar panels.

Energy Production Guarantees

These are reassurances made by the solar developer. They guarantee that your solar panel will generate a specific amount of electricity over a specified period.

Installation

Refers to the physical process of planting a solar panel system on your property.

Maintenance

A solar panel contract may include provisions for ongoing repair of your solar panel system.

Net Metering

This provision grants you credit for excess solar power injected into the grid.

Financing Options

These plans help you pay for the solar panel system. Solar companies and financial institutions provide financing options. Examples include solar leases and loans.

Warranty

A warranty is a protection plan provided by a solar developer. It may cover the repair and maintenance of your solar equipment over a specified period.

Reasons for Terminating Your Solar Panel Contract

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You may want to end your solar panel contract for various reasons, Including:

Financial Difficulties

Solar panel contracts like leases or loans need you to make monthly payments. Financial difficulties like the loss of a job can strain your budget. Forcing you to focus on certain bills over your solar loan payments.

Terminating your solar panel contract to free up some money for your immediate needs.

Moving into a New Home

Moving or selling your home may force you to end your solar panel contract. If you own the solar panels outright, you can sell them with your property. You have no restrictions stopping you from doing this.

But if you’re locked into a leased solar contract, you have limited options. You can convince the new owner to buy out the solar lease or end it.

Few buyers are willing to buy out a solar lease. The paperwork is confusing and intimidating. You may have to end your contract before selling the house.

Inadequate Solar Panel Performance

You develop certain expectations when you install a solar panel system on your property. You expect the system to work effectively and reliably.

Constantly failing solar panels are a source of frustration for many. Using an off-grid solar system may force you to rut up with blackouts as you wait for repairs.

The inconvenience may force you to consider other options. But before shopping for other offers, you must end your current contract.

Breach of Contract

A proper solar panel contract stipulates the terms and conditions of that agreement. The solar company has a responsibility to provide reliable solar equipment. And you should make your monthly payments.

Failure to meet these terms is a breach of contract. Neglecting solar equipment is a breach on the part of the solar company. Failing to make monthly payments is a breach on your part.

Mutual Agreement to Terminate

Both parties may grow dissatisfied with their agreement and choose to end a solar panel contract. By parties, I mean you and the solar panel developer.

Termination by mutual agreement could be due to changing circumstances or other reasons. Both parties can agree on a fair settlement before ending the contract.

Company Insolvency

A solar panel company can go bankrupt or fall into insolvency. A non-functional company cannot fulfill the terms of its contracts.

Force Majeure

Unforeseeable circumstances like natural disasters can make it impossible to fulfill the terms of a contract. Under these circumstances, either party can end the solar panel contract. Check out this article for more information about Force Majeure.

Negotiating with Your Solar Panel Company

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Negotiating your way out of a solar panel contract can be intimidating. Below are steps to help you navigate this complex process.

Review Your Original Agreement

Before starting negotiations, you must understand your previous agreement. Pull out your current solar panel contract and read it carefully. Pay special attention to the terms of the agreement. Study all the termination clauses.

This knowledge can give you an advantage when negotiating your termination agreement.

Identify Your Reasons For Endinging the Solar Panel Contract

It would help if you had a valid reason to get out of a solar panel contract. On a piece of paper, state your reasons for ending the solar panel contract. Be clear and concise. Use the reasons stated in the previous section for inspiration.

Start the Negotiation Process

You can start negotiations once you have a valid reason for contract termination.

Reach out to the solar panel company and express your desire to get out of your solar panel contract. Express your openness to negotiating contract termination in good faith.

The solar company will review your request for termination. If they find your reasons compelling, they will invite you for negotiations.

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Discuss Your Termination Fee

Every solar panel contract has a termination fee. This fee is the penalty you pay for ending the contract. You can find the specific amount in your contract under the termination clauses.

Discuss your termination fees with your solar company. They can also allow you to negotiate your termination fees.

In your negotiations, aim for the lowest possible fee they’ll allow.

Sometimes, negotiations depend on your reasons for ending the solar panel contract. If it’s a breach of contract on the solar company’s part, they may be willing to waive the entire termination fee.

Review Your Outstanding Obligations

In some cases, there may be some outstanding obligations. For example, the solar company may need you to pay extra for equipment damage. Ensure that your termination agreement addresses all your outstanding obligations.

Consider All the Potential Legal Implications

A termination agreement is a legal document. It may have some legal implications that you can’t identify. Seek legal advice and go through the termination agreement with a lawyer. Ensure the agreement protects your interests and rights.

Finalize the Agreement

A termination agreement concludes when you reach a compromise with the solar company. Ensure that the agreement is well documented and signed by both parties. Proper documentation mitigates future disputes and confusion.

Consequences of Terminating Your Solar Panel Contract

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Ending your solar panel contract can have different consequences. The severity of which depends on the terms of your agreement and the circumstances surrounding the termination. The potential consequences of terminating a solar panel contract include:

Fees and Penalties

Many solar companies include termination fees in the termination clauses. The company expects you to pay this fee as a penalty for ending your contract early. Termination fees could be fixed or a percentage of the remaining value of your contract.

Loss of Investment

Terminating a solar panel contract could mean a loss of investment. Assuming you paid for equipment installation and haven’t yet recouped through energy savings.

Legal Action

The solar company may take legal action against you when you fail to pay your termination fees. The company would seek to recover damages incurred from your early termination. They’d argue that they spent money on labor and equipment.

Disruption of Your Energy Supply

Let’s assume that you opted for an off-grid system. For whatever reason, the solar company ends your contract. You’ll have to put up with living in the dark as you figure out your next move.

Reputation Damage

Terminating your solar panel contract can ruin your reputation with other solar providers. Nobody wants to do business with an unreliable customer.

Solar developers also have the power to report late or delinquent payments. In this way, they can ruin your credit score.

Conclusion

You may want to get out of a solar panel contract for various reasons. It could be that you can’t afford to make the payments anymore. Or you could be dissatisfied with the service.

Whatever the reason, you can get out of a solar panel contract in six simple steps:

  1. Review your original agreement
  2. Identify valid reasons for terminating your solar panel contract
  3. Reach out to the solar company
  4. Negotiate your termination fees
  5. Review your outstanding obligations
  6. Finalize the termination agreement

Termination agreements are legally binding documents. Keep a lawyer in the loop as you negotiate your solar panel termination agreement.

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