Solar Electricity

What to Look For in a Solar Installation Contract

Installation contract

The installation contract should present information about the project in a clear manner, laying out important information in the first few pages, such as system size, specifications for the exact equipment being installed, total system cost, cost per watt of system size ($/w), estimated production, and payment terms. It should also specify all applicable warranty information, the project’s estimated start and completion dates, and a list of any subcontractors that are going to be used. It is recommended that an installer provide a minimum five-year workmanship warranty to protect equipment against defective workmanship, electric component breakdown, or significant degradation in electrical output. In addition, the solar electric equipment should have appropriate manufacturer’s warranties. The below section provides information on what to look for in a contract, for all ownership models.

Installation timeline

An installation timeline provides estimated dates for when important installation milestones occur, including an overview of the expected installation process.

Estimated annual production

The installer should provide an estimate of annual system production, what the system is anticipated to produce over the life of the system, and what assumptions they used to develop the estimates. Some installers may offer production guarantees. If you are interested in a guarantee, you should consider the timeframe of the guarantee, who is responsible for monitoring, and what triggers a guarantee payment.

Customer disclosure form (SMART)

As part of the Massachusetts SMART program, installers are required to submit a Customer Disclosure Form that includes relevant project information for you, whether the contract is for a direct ownership, third party owned, or community shared solar electric system. The applicable version of this form should be filled out by the installer and provided to you prior to contract signature.

Liability and workers’ compensation insurance

For liability protection, you should insist that a vendor carry a certificate of insurance for general liability. You should also verify that workers’ compensation insurance is carried to protect against liability for any on-site, work-related injuries. These are required to obtain a building permit.

Itemized budget and progress payment timeline (for direct ownership)

An itemized budget should have any exclusions or potential added costs. A payment timeline ensures that you know the number, frequency, and size of payments, as well as when they are due. Any one-time or recurring fees that the installer charges as a part of their process should also be stated up front.

The contract should detail the process for resolving unexpected changes to the project that occur during permitting, installation, or inspection. Ensure that this covers timing, the process by which the installer should notify you of items outside the original scope, and any payment milestones that are not refundable. The contract should detail a process for dispute resolution, such as mediation or arbitration, if necessary.

Warranties

You should ensure that equipment and workmanship are covered under appropriate warranties. It is recommended that you request equipment warranties that, at a minimum, meet the requirements outlined below. Equipment should be UL listed and should also be on the California Energy Commission’s list of approved equipment, found here.

Photovoltaic modules

Minimum of one-year product warranty from date of sale to customer for product workmanship and materials. MassCEC recommends that the modules have a minimum performance warranty of 20 years. After 20 years, the modules should produce at least 80 percent of what they originally produced at the time of purchase.

Inverters

Minimum of a ten-year product warranty from date of sale to consumer for product workmanship and materials.

Mounting equipment

Five-year product warranty.

Workmanship

Minimum five-year labor warranty (largely applicable to direct-ownership projects) provided by the installer to protect the purchaser against defective workmanship, solar electric project or component breakdown, or degradation in electrical output of more than fifteen percent from their originally rated electrical output during the warranty period. The warranty must cover the solar electric project, including modules and inverters, and provide for no-cost repair or replacement of the solar electric project or system components, including any associated labor during the warranty period.

The Office of the Attorney General’s FAQ about solar products for consumers in Massachusetts can provide helpful information and concepts to consider during the purchase of a solar PV system.

Additional items to consider for third party owned solar electric system contracts

When considering a solar lease or power purchase agreement, review the contract carefully to understand all terms and conditions. While contractual terms may vary, items to consider are:

The length of the contract
Who benefits from incentives like tax credits and production-based incentives
Whether there is an option to buy the system at a later date
Estimated annual utility rate increase
The initial electricity price and any applicable price changes over time, such as a price escalator
What happens at the end of the contract term
What happens if you move out of the house or business prior to the end of the contract term

It is also important to discuss key contractual terms that may impact overall benefit. For example, a third party owned system may provide immediate savings without an upfront cost, but if the contract is canceled may carry significant fees that offset any prior savings. The Solar Energy Industry Association (SEIA) has developed model lease and Power Purchase Agreement documents for consumers that provide key system information and terms in a clear manner. You can cross-compare these model documents with lease or PPA contracts that you receive.