Glossary
Escalator
The escalator is the clause in a solar lease or PPA that automatically raises the monthly payment (or the per-kWh price) every year by a fixed percentage, typically between 0% and 2.9%. A high escalator compounded over 20-25 years can push the solar payment above the utility rate.
What the escalator is
The company that owns the system justifies the escalator by saying electricity rates also rise every year, so your payment “keeps pace” and the savings hold. That is true only if the utility rises at the same pace or faster. If it rises less, every year the gap between what you pay for solar and what you would pay the utility gets narrower.
The effect compounds: a percentage that looks small in year one builds on itself for two decades. The final year’s payment can be substantially higher than the first.
Why it matters in Florida
FPL, Duke and TECO rates do not rise in a straight line: they depend on the fuel charge, on Public Service Commission decisions, and on years when they actually drop. A fixed escalator, by contrast, always goes up. You are betting that the utility will be more expensive than your contract for 25 years, and you are the one making that bet, not the company.
That is why we prefer contracts with a 0% escalator even if the starting payment is somewhat higher, and why the solar subscription we offer through our partner is structured as a fixed payment over 3 or 5 years, with no escalator and contractually guaranteed savings.
Common mistake
Accepting “only 2.9%” without seeing the year-by-year table. Ask the salesperson for the payment in each of the 25 years and the total contract cost. Compare it with what you would pay the utility if its rate rose less than the escalator. If the salesperson does not have that table, you already know why. In the escalator in a solar lease we show you how to calculate it.
Full guide: The escalator in a solar lease: what 0% vs 2.9% means over 25 years, with a table →
Updated