Solar contracts can sometimes include specific clauses that effectively hide additional costs beyond the initially quoted price. These hidden costs often stem from various fees, ongoing obligations, or conditions embedded in the fine print of the contract. Here are some common areas and clauses in solar contracts where additional costs might be concealed:
Potential Hidden Cost Clauses in Solar Contracts
1. Dealer, Program, or Finance Fees
Some contracts include extra fees labeled as “program,” “dealer,” or “finance” fees. These can substantially increase the financed cost of the system. For example, dealer fees can add 40% or more to the price of financed solar systems, meaning a $100,000 cash price might balloon to $140,000 when financed.
2. Maintenance and Repair Obligations
While solar panels typically require minimal maintenance, contracts may not cover upkeep such as cleaning, repairs, or replacement of parts damaged outside warranty terms. These maintenance costs can add up over the lifespan of the system and are often left as the owner’s responsibility.
3. Insurance Requirements
Many contracts require the homeowner to insure the solar system to protect against damage, theft, or acts of God. This insurance is an ongoing cost not always clearly highlighted in the contract but necessary to safeguard the investment.
4. Monitoring Service Fees
To maintain performance guarantees or system monitoring (to track output and detect issues), some contracts require subscription to a monitoring service. This is an extra recurring fee that might be buried in contract language.
5. Permitting and Installation Soft Costs
The contract might not clearly itemize fees related to permitting, inspections, and other administrative overhead, which can add significantly to the total cost. These are often considered “soft costs” and can amount to a large fraction of the total installation price.
6. Lease or Power Purchase Agreement (PPA) Transfer Fees
For leased systems or PPAs, contracts often include clauses about transfer fees if the property is sold or refinanced. These fees can be prohibitively expensive and complicate the sale of the house, sometimes requiring the lease to be paid off entirely before transfer.
7. Interconnection and Utility Fees
Contracts may not fully disclose costs related to connecting the solar system to the grid, including interconnection fees charged by utilities or potential upgrades required to the local grid. These charges can add unexpected expenses after installation.
8. Impact on Home Sale and Buyer Qualification
Solar contracts, especially for leases, may impose conditions where the new homeowner must qualify for the lease or PPA. This can limit the pool of buyers and decrease the property’s marketability. The solar-related debt could also affect mortgage approvals and debt-to-income ratios, though this is more a practical effect than a hidden clause.
Summary Table of Common Hidden Costs in Solar Contracts
| Hidden Cost Type | Description | Typical Impact |
|---|---|---|
| Dealer/Finance Fees | Extra fees added to financed systems increasing total cost | Up to 40% increase in financed price |
| Maintenance & Repairs | Costs for cleaning, repairs, replacements outside warranty coverage | Recurring or occasional significant costs |
| Insurance | Requirement to insure panels for damage/theft | Ongoing insurance premiums |
| Monitoring Fees | Subscription fees for system performance monitoring | Recurring monthly or annual fees |
| Permitting & Installation Soft Costs | Fees for permits, inspections, and administrative overhead | Thousands of dollars added |
| Lease Transfer Fees | Charges to transfer leased solar system agreements upon sale | Can be very high, tens of thousands |
| Utility Interconnection Fees | Charges by utilities for connecting to the grid, sometimes including grid upgrade costs | Varies, potentially a few thousand+ |
| Buyer Qualification Restrictions | Requirement that buyers qualify to take over lease or PPA, affecting sale and financing | Reduces marketability and financing options |
Recommendations
Before signing any solar contract, carefully review and ask for clear explanations of any fees labeled as dealer, program, finance, or transfer fees. Confirm who is responsible for maintenance and insurance and whether monitoring services are mandatory and billed separately. Also, inquire about potential impacts on selling the property and whether there are utility or interconnection fees not included in the initial quote.
Understanding these contractual details helps avoid surprises and ensures you fully account for the true cost of going solar.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/are-there-any-specific-clauses-in-solar-contracts-that-might-hide-additional-costs/
