Charts and payment figures spread out next to a calculator

What an escalator is

An escalator is a clause in many solar leases and PPAs that raises your payment or your per-kWh rate by a fixed percentage every year. It is usually stated in the payment section or a pricing schedule. Loans generally do not have escalators, though some loan payments rise if a planned prepayment is not made.

How it adds up

Illustration: a $150 monthly payment

Year 1, any escalator$150
Year 10 at 2.9% a year$194
Year 20 at 2.9% a year$258
Year 25 at 2.9% a year$298

Each year’s payment is the prior year’s times 1.029. Rounded to the dollar. Your contract’s rate and start date control.

The question is not just the rate. It is whether the payment will stay below what you would otherwise pay your utility.

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Find your escalator

Look for words like escalator, annual increase, or price adjustment, and a percentage. Check your statements from two different years to confirm the increase matches the contract.

If no one explained it

If you were told your payment would never go up, or the escalator was not disclosed, that may be a misrepresentation. Read misled by a solar salesperson, and see the lease and PPA exit guides for buyout and transfer options.

Common questions

Can I negotiate the escalator away?

Companies rarely change signed terms, but it can be part of a negotiated resolution when there is a real problem with how the contract was sold.

Is a 0% escalator better?

Usually it means a higher starting payment. Compare total cost over the term.

Sources

  1. FTC: Solar power for your home. Ask whether payments increase over time
  2. CFPB: Issue Spotlight, Solar Financing (August 2024). Payment increases and savings claims

General information, not legal advice.

This guide can’t tell you whether a right applies to your agreement. For that, talk with a licensed attorney in your state.