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What is the purpose of a solar lease contract?

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Quick Answer

A solar lease contract serves as official documentation between two parties for the leasing of solar panels for generation of power in a home or business, including the exact terms of the agreement. The contract typically outlines the benefits for each party, length of the contract and any responsibilities from the lessor to the lessee.

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Full Answer

When a home or property owner wishes to establish a solar powered energy system for the property, the owner has the option to purchase the panels and accompanying systems from a retailer or lease the equipment, which typically carries no initial down payment on the items for owners with lower available funds. Another reason property owners choose to lease the equipment is if the owner is unable to qualify or unwilling to participate in various state and federal rebate programs for investing in renewable energy sources. In these cases, the owner creates a solar lease contract with a company to rent the panels.

The contract outlines the exact equipment the company is renting to the property owner, including the full term of the rental period, which may be up to 25 years. The contract also frequently states that the company has the right to claim any rebates or tax breaks for the purchase of the equipment and that it retains sole ownership for the duration of the contract. In exchange, the renter is able to use the equipment to generate power and contact the company for maintenance on the panels.

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