Solar early termination fees
and what a buyout really costs.

Where the exit price hides in your contract

When people search for a solar early termination fee, they usually mean one of three different prices. Each lives in a different part of the contract, and each has a different result.

• A purchase option. You buy the system and own it. The lease or PPA ends, and the panels become yours to maintain.
• A prepayment. You pay the remaining payments up front, sometimes at a discount. The bill stops, but the company usually still owns the system until the term ends.
• Default damages. What the company says you owe if you stop paying or break the contract. This is usually the most expensive way out, and it can follow you to collections or court.

A loan works differently. You already own the panels, so there is no termination fee. Getting out means paying off the balance, and the questions are about payoff and prepayment terms.

How leases and PPAs price an early exit

There is no industry standard formula. The price comes from your own agreement, and companies set it in different ways.

• Fixed purchase windows. A model residential lease template posted by SEIA, the Solar Energy Industries Association, lets the homeowner buy the system at the end of year 5, 10, or 15 at prices written into the contract. Tesla says buyouts on its current leases become available after year five, at a price set out in the contract.
• Fair market value. Many agreements price the end-of-term purchase at fair market value. Tesla, for example, lists buying the system at fair market value as one choice at the end of the lease.
• Prepayment at a discount. The same model lease says a homeowner who moves may prepay the remaining payments at a discount. Not every company allows it. Tesla’s leasing FAQ says you cannot pay off its lease in advance at this time.

For a PPA, California’s official solar disclosure form asks a direct question: do you have the option to buy the system or prepay some or all of the PPA? If you are in California, your answer should be on that form, which comes with your contract. Elsewhere, look for sections titled purchase option, early buyout, or prepayment.

Waiting for the end of the term is also an exit, and it may cost less. Tesla lists three choices when its lease ends: renew for five years, buy the system at fair market value, or have Tesla remove it, with a removal cost. In the SEIA model lease, removal at the end of the term is free if you have not renewed, bought the system, or defaulted. Check what your own contract says before you pay to leave a few years early.

What the contract says happens if you stop paying

Some homeowners consider simply stopping payment. Read the default section first, because it is often the costliest exit. In the SEIA model lease, after a default the lessor may recover the unpaid amounts already due, plus the unpaid balance of all remaining rent, discounted to present value at 5 percent a year, plus compensation for lost tax benefits. It may also recover the costs of curing your default and taking the system back.

Stopping payment can lead to late fees, collections, and a lawsuit, and the company may still claim the full default amount. If you are thinking about it because the deal was misrepresented, talk to a consumer attorney before you miss a payment.

Loans: no termination fee, but read the payoff terms

With a solar loan, ending early means paying off the balance. Federal Truth in Lending rules require the lender’s loan disclosures to state whether a charge may be imposed for paying all or part of the principal early. California’s solar disclosure form asks the same thing: is there a prepayment fee, and what is it?

Many solar lenders say they charge none. GoodLeap, for example, says it never charges a fee or penalty for prepayments. Even without a penalty, a payoff figure is more than the principal. Expect accrued interest to the payoff date and any unpaid fees.

• Ask for a written payoff statement with a good-through date.
• Check whether a large prepayment was expected by month 18 and whether your payment reset. See how to get out of a solar loan.
• After payoff, make sure the lender terminates its UCC filing. See clearing a solar UCC filing.

How to request a written buyout quote

1. Find the right company. Your statement names the company you pay today, which may not be the installer. Use our account contact finder if you are unsure.
2. Mark the sections. Note the page and paragraph of the purchase option, prepayment, and default sections.
3. Ask in writing. Use email or the company’s portal so you have a record.
4. Keep everything. Save the request, the reply, and the date. Our document checklist lists what else to collect.

What to say: “I am requesting a written quote to buy out my agreement, account number [number]. Please include the total price, the contract section and method used to calculate it, the date the quote expires, whether a prepayment option is available and at what discount, what happens to warranties and any production guarantee, and who will release the filing on my property record after payment.”

If you are selling your home, say so and give your closing date, so the quote does not expire before closing.

Check the number before you pay

• Compare it to what is left. Add up your remaining payments, including escalator increases. See solar escalator clauses. A buyout well above that total deserves an explanation.
• Check the method. If the contract says fair market value, ask who set it and what it was based on. If it lists fixed prices by year, confirm you are reading the right year.
• Check the timing. Some contracts only allow a purchase at set points. Ask whether waiting until the next window lowers the price.
• Count ownership costs. Once you buy, repairs, inverter replacement, and monitoring become yours.

What a buyout or prepayment should include

Before you send money, get a written agreement that answers each of these. If a point is missing, ask for it to be added.

• The exact amount and what it covers. The total, the date it is good through, and confirmation that no other fees, taxes, or charges will follow.
• What ends and what continues. For a buyout, that the agreement ends and you own the equipment. For a prepayment, how long the company keeps owning and maintaining the system, and what happens at the end of the term.
• Proof of ownership. For a buyout, a bill of sale or similar document listing the panels, inverter, and any battery.
• The filing on your property record. Who will release the UCC or notice filing, by what date, and how you will get a copy.
• Warranties. Which manufacturer warranties pass to you, and whether any workmanship or production guarantee ends.
• Monitoring and the utility. How the monitoring account moves to you, and whether anything with your utility must change.
• Autopay. When automatic payments stop, and how any overpayment will be refunded.

Pay by a traceable method, and keep the receipt with the signed agreement. If a payment is taken after the agreement ends, dispute it in writing right away.

Negotiating a buyout

Companies are not required to negotiate, but a documented, specific request may get a second look. Your leverage comes from facts.

• Errors. A quote that uses the wrong year, wrong system size, or charges for a period already paid.
• System problems. Outages, missed production guarantees, or unrepaired roof leaks, with dates and records.
• What you were told. If the salesperson promised a cheap buyout or no fee to leave, write down who said it and when, and keep any texts or brochures.

Ask for any revised offer in writing, with the expiration date and confirmation that payment ends the agreement in full.

When a fee may be challengeable

An early exit price is not automatically valid just because it is in the contract. Some legal limits may apply, depending on your agreement and state.

• The federal Consumer Leasing Act. It says lease charges for default or early termination may be specified only at an amount that is reasonable in light of the anticipated or actual harm. Its rules generally cover leases of personal property for household use lasting more than four months, up to a dollar limit that is adjusted each year. Whether a solar lease qualifies is a legal question. PPAs sell power rather than lease equipment, so they may fall outside it.
• Required disclosures. For covered leases, Regulation M requires a statement of the conditions for early termination and whether you may buy the property, with the price or method and when you can use the option.
• State commercial law. New York’s version of the Uniform Commercial Code, for example, allows lease damages to be set in advance only at an amount or formula that is reasonable in light of the anticipated harm.
• Misrepresentation. If you were told there was no fee to leave, or that you could cancel anytime, read misled by a solar salesperson.

These arguments depend on the details, so have a consumer attorney review your contract before you dispute a fee or stop paying. File a complaint in writing with the company first, then with your state attorney general, and with the CFPB for loans. Our complaint letter builder can help.

Related guides

• How to get out of a solar lease
• How to get out of a solar PPA
• How to get out of a solar loan
• Clearing a solar UCC filing
• Complaint letter builder