A homeowner in Ohio installed solar panels through ADT Solar roughly two years ago. The pitch made sense: lower monthly electric costs, no major upfront investment, and predictable rates. Then, after 15 months, the monthly payment suddenly increased by over $200. When Michael called customer service, they were dismissive and said the increase was “in the contract,” sending him a highlighted clause showing a scheduled rate hike. Now he’s paying more than he ever did through a basic electric bill, and ADT has since shut down its solar division, leaving him locked into a long-term contract with no clear path out.
Consumer finance expert Clark Howard’s response was blunt: “Michael, I mean, it’s why I have never liked any kind of solar leasing at all. I like if you’re going to go solar, you own the thing.” His verdict on Michael’s situation was equally direct: “You are as stuck as stuck could be in that contract.”
Howard is right. The solar lease model contains structural risks that are easy to miss when a salesperson is at your door promising lower bills. Michael’s situation is a case study in exactly how those risks materialize.
The Escalator Clause: What It Is and Why It Hurts
Most solar leases include an escalator clause, a contractual provision that automatically raises your monthly payment by a fixed percentage each year. These escalators compound over time, and the effect is significant. The compounding effect is the hidden danger. A lease that starts modestly with a typical annual escalator quietly grows year after year, and by the time a homeowner reaches the midpoint of a 20-year contract, that payment has climbed substantially. The total cost over the full contract term can easily exceed what the system would have cost to buy outright. This means the lease customer pays more and owns nothing.
Michael’s situation appears more severe than a gradual annual escalator. His payment jumped by over $200 in a single month after 15 months, suggesting either a large scheduled step-up buried in the contract or a cumulative adjustment triggered at a specific milestone. He acknowledged “the language was buried in the fine print” and that he was “never clearly told verbally or otherwise that a significant rate increase was coming.” That gap between the sales pitch and the contract language is where most solar lease disputes originate.
What Owning Actually Changes
When you own a solar system outright or finance it through a solar loan, there is no escalator. Your loan payment is fixed, and once paid off, you generate electricity at essentially zero marginal cost. The federal solar Investment Tax Credit is also only available to the system owner, meaning lease customers hand that tax benefit directly to the leasing company.
Consider two Ohio homeowners, each installing a comparable system. The first signs a lease with an annual escalator over 25 years. The second finances the same system with a solar loan at a fixed monthly rate. The lease customer pays less in year one but faces perpetually rising costs with no equity and no tax credit. The loan customer owns the asset once the loan is paid off, after which electricity from the panels is free. By year 20, the lease customer may be paying more than grid electricity would have cost.
That math is why Howard’s position is grounded in how these contracts actually play out over their full life.
The ADT Shutdown Makes It Worse
ADT officially exited the residential solar business in early 2024 after its solar division generated significant losses. ADT had acquired a residential solar company and rebranded it as ADT Solar, but the venture proved unprofitable. Howard noted that “when ADT decided to get out of the solar business 2 years ago, we took a lot of questions from people at that point” and that “as best I understand it, they have contracted for continual servicing of the customers” even though they’re out of the business.
This is the compounding problem Howard called “the double whammy.” Michael is locked into a contract with a company that no longer operates its solar division. He can’t renegotiate with a sales team that no longer exists. He can’t easily switch providers because the lease is attached to his home. And if he tries to sell the house, a prospective buyer inherits the lease obligation, which can complicate or kill the sale entirely.
Who This Advice Fits
Howard’s “own, don’t lease” rule applies most clearly to homeowners who plan to stay at least 10 years, have access to financing, and want to capture the federal tax credit. A solar loan at a fixed rate turns the system into an asset that eventually pays for itself through reduced utility bills.
Leasing is hard to justify in almost any scenario when you run the full 20-to-25-year math. The one exception might be a homeowner with no access to financing who genuinely cannot purchase the system. Even then, the escalator clause and company-exit risk need careful evaluation before signing.
For Michael, Howard’s assessment is grim but honest: “You are stuck unless and until the services required by the contract are failed to be delivered to you” and “some lawyer comes along” who “is able to successfully help people break these contracts. Until that point, you gotta pay it.” If ADT’s contracted servicer fails to maintain the system or honor warranty terms, that could create legal grounds to exit the agreement. Documenting every service failure, missed maintenance visit, or warranty claim denial is the most actionable step Michael can take right now.
What to Do Before Signing Any Solar Agreement
The contract structure matters as much as the technology. A well-designed solar loan builds equity and captures the federal tax credit. A poorly understood lease can cost more than grid electricity over its full term. Before signing any solar agreement, verify these specifics:
- Identify whether the contract includes an escalator clause and calculate total payments over the full contract term, not just the first-year rate.
- Confirm who services the contract if the original company exits the business, and get that obligation in writing with specific performance standards.
- Compare the lease’s total 20-year cost against a solar loan for the same system, factoring in the federal tax credit that only the owner receives.
- Ask your real estate agent how a solar lease affects a future home sale, since buyers must assume the lease or it must be bought out at closing.
Households carrying more debt and facing higher grocery and housing costs have less room to absorb a $200 monthly increase that compounds for decades. A $200-per-month jump in a solar lease payment against that backdrop is a budget disruption that can persist for decades.
Howard’s core point stands: if you’re going solar, own the system. A lease that saves you money in year one can cost far more by year 15, especially if the company behind it is no longer around to answer the phone.
Top Gaining Stocks
Top Losing Stocks