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Understanding your Sunrun solar lease, PPA and solar contract agreement

Sunrun is one of the largest solar installation companies in the country and has partnerships with organizations like Comcast, Major League Baseball, and Costco. The company primarily offers solar leases and power purchase agreements (PPAs) to homeowners, although there are also cash purchase and solar loan options. Are you considering a lease or PPA offer from Sunrun? Before you sign on the dotted line, review EnergySage’s guide to evaluating your Sunrun offer.

Sunrun solar lease: what you need to know

When you sign a Sunrun lease or PPA, you are giving the company permission to install solar panels on your home. Even though the panels are located on your roof, you don’t own them. You simply agree to pay the owner (Sunrun) each month for the electricity that the panels generate.

If you sign a solar lease, you pay a flat monthly “rent” to Sunrun in exchange for electricity; if you sign a PPA, you commit to paying a fixed rate per kilowatt-hour (kWh) for the electricity that your solar panels generate. Like most other solar leasing companies, Sunrun leases and PPAs are both typically 20-year agreements.

Your Sunrun lease or PPA, explained

All Sunrun lease and PPA offers have common pieces of information that you can use to evaluate your long-term solar savings. Here’s a quick guide to help you understand what you’re signing up for if you accept a Sunrun quote.

Terms included in a Sunrun PPA offer.

Monthly payments due to Sunrun: Every Sunrun offer will be based on either a per-kWh rate (in the case of a PPA) or a flat monthly payment (in the case of a lease). This is one of the most important numbers in your Sunrun quote. If you want to see significant savings when you sign up for a solar lease or PPA with Sunrun, your total monthly payments should be much lower than an average electricity bill from your utility.

Annual rate increase (also known as the “escalator”): It’s important to note that the monthly payment indicated in your Sunrun lease or PPA offer is only your rate in the first year. Leases and PPAs often have an annual rate increase of around three percent per year built into the agreement.

In the example above, the annual increase is 0.99%, which means that the 14.5 cent rate that you pay per kWh will increase to 17.5 cents per kWh by the end of the 20-year agreement.

Electricity rate assumptions: In Sunrun’s calculation of 20-year savings, the PPA offer uses the assumption that electricity rates will increase by 4.75% each year. However, electricity rates (and rate increases) can vary significantly by state across the country. The national ten-year average is closer to 3%.

Use the U.S. Energy Information Administration, a federally funded resource for energy statistics and analysis, to get context about what sort of rate increase to expect in your state. The EIA has information about historical per-kWh rate increases as well as projections for future electricity rates. Make sure to double-check the EIA’s projections for your area to ensure that it is similar to what is included in Sunrun’s offer. Additionally, be sure to confirm that the electricity bill information is accurate for your home. Don’t be afraid to ask clarifying questions!

System information: How much of your electricity use should you expect your solar panels to cover? Understanding how much electricity your panels will generate, and how much you will need to buy from your utility, can help you confirm that your system is the right size for your home.

In most cases, you don’t want a system that will produce more electricity than you can use. If Sunrun installs a system that produces more electricity than you use, you could end up paying Sunrun for more electricity than you actually need.

Sunrun lease and PPA offers also include information on the equipment that will be installed on your home. Evaluate the quality of the solar panels and inverters included in your offer to ensure that it’s up to your standards for a 20-year commitment.

Questions to ask when reviewing a Sunrun solar contract

The initial quote that you receive from Sunrun won’t contain all of the information that will be included in your final contract. Before you sign on the dotted line, there are a few more questions you should ask your Sunrun energy consultant:

  1. Is there a performance guarantee? A performance guarantee states that your system’s performance won’t fall below a set standard. In the unlikely event that your system malfunctions, the performance guarantee is your recourse with the company. Make sure you have one in your contract.

  2. Did you make any changes to the design of the system? Your system’s design isn’t finalized until you receive the final contract from Sunrun. Before you sign, verify that there the physical design and layout of your solar panel system is what you expect based on your original offer. For example, check if any new panels been added, or if their location on your roof has changed.

  3. What are the terms of the warranty? The initial offer that you receive may include an overview of terms for warranties and repairs, but you should review the fine print in your final contract to understand what is and is not covered in your warranty.

  4. What are my options when the agreement ends? Most homeowners will have the option to either extend their agreement with its existing terms, upgrade to a new system under a new contract, or have the system removed at no cost.

How to compare a Sunrun solar lease or PPA to a system purchase

Whether you choose to buy or lease your solar panels depends on your financial situation and reasons for going solar. While owning your solar panels does offer significantly greater 20-year savings, solar leases can be a better deal for homeowners who can’t take advantage of tax credits or other rebates and incentives.

Most solar leases require $0 down, and solar leasing companies make it easy for you to sign an agreement on the same day. However, solar leases and PPAs are still 20-year contracts. As with any other major financial commitment, shopping around is the best way to ensure that the solar financing that you choose is the best option for you. Getting multiple offers from local solar installers on the EnergySage Solar Marketplace is an easy, no cost way to review all of your solar options and find the best fit.

More than 30 percent of EnergySage users already had an offer from a solar company when they registered. Homeowners with pre-existing Sunrun quotes in hand are encouraged to join, and compare their Sunrun offer with competing offers from local solar installers on EnergySage.

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