Solar lease escalator and buyout: the arithmetic for a Las Vegas lease or PPA

A solar escalator compounds. At 2.9 percent a year, the payment in year 25 is 1.99 times the payment in year one, and across a 25 year term you pay about 36 times the first year's total instead of 25. A buyout is priced by your own agreement, not by Nevada law, so the number to hold it against is what you have left to pay, which you can work out yourself below.

This page is for a Las Vegas homeowner who already has a lease or a power purchase agreement, looks at the payment going up every year, and wants to know what getting out would cost. If you are still deciding whether to sign one, prepaid, lease, loan or cash is the page to start on.

Why 2.9 percent is not a small number

An escalator is a fixed percentage your payment rises by each year. It sounds like inflation. It is not a forecast of anything. It is a promise, fixed in ink, about your payment only.

The trouble is that a percentage reads as a small add on, and it is not added once. Each year's increase is taken on top of the last year's increased payment. That is compounding, and at 2.9 percent it doubles the payment in a little over 24 years.

Here is the arithmetic, done per $100 of monthly payment in year one, so you can scale it to your own bill. It assumes one increase a year, the first in year two.

That table is our own arithmetic on a round $100, not a price anybody charges. To use it, divide your own first year monthly payment by 100 and multiply any cell by the result. A first year payment of $150 on a 2.9 percent, 25 year agreement is 1.5 times the $43,181 row, which is about $64,770 in total.

The formula, if you want to check us: the payment in year n is the year one payment times 1.029 to the power of (n minus 1). Swap 1.029 for your own rate.

On a power purchase agreement the escalator usually applies to the price per kilowatt hour rather than a fixed monthly figure, and what you pay each month also depends on how much the panels produce. The compounding is the same. It is the price that doubles.

Find the number in your own paperwork

Nevada made the escalator a required line. You should not have to take anybody's word for it.

• On a lease, NRS 598.9809 requires the cover page to state the rate of any payment increases and the estimated monthly payment in the first year. NRS 598.9811 requires the agreement itself to state both the monthly payments and the total payments due under the lease, excluding taxes. That total is the escalator already added up for you. Check it against the table.
• On a power purchase agreement, NRS 598.9816 puts the rate of any increase in the payments, and the date of the first increase, on the cover page, next to the first year rate per kilowatt hour. NRS 598.9817 subsection 7 repeats it in the contents.

These sections were added to Nevada law in 2017 and amended in 2025, so what your own agreement contains depends on when you signed it. If yours is older than the rule, the number is still in the agreement somewhere. It is just not guaranteed to be on the front.

The escalator against your NV Energy bill

The usual sales argument is that the escalator runs below what the utility will do, so the gap between the two widens in your favor over time. That may happen. It is not guaranteed, and Nevada makes every solar agreement that mentions utility prices say so: under NRS 598.9819 the agreement has to state that actual utility rates may go up or down and actual savings may vary.

So an escalator is a certainty on one side of the comparison and a guess on the other. If the utility's rates rise more slowly than your escalator, or fall, the gap closes instead. Your own year to year bills are the only evidence that counts for your house. Keep them.

How a buyout is priced

Nevada requires every lease and every power purchase agreement to describe any option to purchase the system before the end of the term: NRS 598.9809 and 598.9811 subsection 18 for a lease, NRS 598.9816 and 598.9817 subsection 14 for a power purchase agreement. What the statute does not do is set the price. The method is whatever your agreement says it is.

So the first job is to find that clause and read which kind of number it produces. It may be a table of purchase prices by year, a formula, or a figure to be set at the time you ask. Whatever it is, you are entitled to see how the number you are quoted was reached.

Then measure the quote against the one thing you can calculate without anyone's help: the payments you still owe.

Take a 20 year agreement at 2.9 percent with a $100 first year monthly payment. After ten years you have paid about $13,693. Years 11 to 20 still to come add up to about $18,225, before any discount. That remaining total is a ceiling. A buyout above it asks you to pay more to leave than to stay.

Money paid now is worth more than the same money paid later, so a fair buyout should come in below that ceiling. How far below depends on the discount rate used. Treating each year's payments as one lump, the same remaining $18,225 is worth about:

Again, that is arithmetic on a round $100, not anyone's price. Scale it by your own first year payment. If your buyout sits well above the undiscounted remaining payments, ask in writing what it includes that the payments do not.

What to ask the finance company, in writing

Ask by email or letter, not on the phone, so the answer is something you can read again and show someone.

1. The buyout figure, the date it expires, and the method. Ask for the clause of the agreement it comes from and the inputs used.
2. The remaining payment schedule. Every remaining payment with the escalator applied, so you can check it against the ceiling above.
3. What transfers on payoff. The equipment, the manufacturer warranties, the monitoring account and access, and any production guarantee. Ask whether any warranty ends at payoff rather than transferring.
4. The lien release. Ask how and when any UCC fixture filing against your house will be terminated once you pay. Who owns my solar panels shows how to find that filing in the Clark County and Nevada records yourself.
5. Taxes and fees. Any sales or use tax on the transfer, and any payoff or document fee.
6. Who owns the agreement now. Leases and power purchase agreements are often sold on. Under NRS 598.98218 whoever bought yours takes it subject to the claims and defenses you had against the original financier, up to the amount owed, so a sale does not strip those away from you.

Before you buy it, have the system checked

A buyout turns you into the owner of equipment that has been on a roof in Las Vegas heat for years, and every problem it has becomes yours on the day the money moves. Before you pay, check that it is actually producing what it should: is my solar system working shows how to read your own production against your bill. Ask the finance company for any open service tickets and the inverter's age. If anything is failing, get it fixed under the agreement before you buy, not after.

The tax credit does not come with the buyout

A buyout is a purchase of a used system, and it does not bring a federal credit with it. The IRS page for the Residential Clean Energy Credit says the credit is not available for any property placed in service after December 31 2025. On the other side of the agreement, Public Law 119-21 section 70513(c) added subsection (i) to section 48E, which denies that credit for home solar equipment the owner rents or leases to a third party. A lease does not carry a federal credit to you, and under 48E(i) the leasing company cannot claim 48E on it either. What the federal solar tax credit is worth in 2026 has the full picture, and your own situation belongs with an independent tax professional.

If you are selling the house

The agreement has to say what happens on a sale: NRS 598.9811 subsection 19 for a lease and NRS 598.9817 subsection 15 for a power purchase agreement both require a description of whether your buyer can take it over, the conditions of the transfer and the process to pay it off. The usual choices are that your buyer assumes the agreement or you pay it off at closing, and the payoff is the same buyout figure you are measuring here. Buying a house that already has solar covers the other side of the table.

If you have not signed yet

Everything above is easier before the signature than after it. You can cancel a residential solar agreement in Nevada until midnight of the third business day after you sign, or the tenth business day if you are 60 or older; your rights when you sign a solar contract in Nevada sets out the clocks, and how to compare solar quotes shows how to put an escalated payment next to a purchase price.

We are a licensed Nevada electrical contractor, not a finance company, a law firm or a tax adviser. The arithmetic on this page is ours and you can redo it; the legal points are from the statutes listed below. If an agreement in front of you does not match what they require, take it to a Nevada attorney or the Public Utilities Commission of Nevada.

We recheck this page quarterly. Last checked 2026-09-28. If a number here has moved, tell us and we will fix it the same week.