Today the standard is for a consumer to pay little or nothing upfront for their rooftop solar system upfront. Instead, the consumer pays for the system over time through the equivalent of lease payments (often structured as a predetermined purchase agreement for power generated). This is really just the consumer equivalent to a standard sale/lease-back transaction which is common across much of structured finance.
Yet there is a problem here. The important underlying assumption in any sale/lease-back transaction is that the asset will be durable enough to survive for the length of the lease payments. If the asset fails before the end of the lease period, it creates a problem for both parties. The issue is resolved based on the documents backing the transaction of course, but it creates a risk inherent in the deal for one party or the other.
The same logic applies to leased rooftop solar panels. These panels are supposed to last 20 years or more in many cases. That level of assumed durability has not been widely tested though since rooftop solar is really only came into prominence in the last decade. Now some solar executives are starting to raise concerns about whether the systems in question are really as durable as many consumers and solar companies have expected. If the equipment fails prematurely, one party or the other is in for a very unpleasant surprise.
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