The Solar Proposal Is a Sales Document. Read It Like One.
When I received my first solar proposal, it was a 14-page PDF with a lot of charts showing money going down and solar savings going up. I had also done my homework on what solar salespeople don’t tell you, which helped me know what to look for. It looked professional. It had my address, a satellite image of my roof, and a 25-year financial projection. The bottom line showed I’d save $47,000 over 25 years. That number felt great.
What I found out later — after getting six more quotes and doing my own research — was that proposal had embedded four assumptions that looked reasonable on the surface but were optimistic in ways that quietly inflated that $47,000 figure. Not fraudulent. Just… favorable to the seller. Here are the five things I now look at in every solar proposal.
1. The Production Estimate (And How They Get There)
Every solar proposal includes an estimated annual production number in kWh. For my house, these estimates ranged from 10,700 kWh to 12,100 kWh across seven proposals — for essentially the same size system on the same roof. That’s a 13% spread. The difference between the high and low estimate, over 25 years at $0.13/kWh, is over $5,000 in projected savings. Same house, same panels, different assumptions.
Ask the installer: What software did you use to calculate this, and what weather data did you use?
The legitimate answer is PVWatts (free NREL tool), Aurora Solar, or Helioscope — all use real historical weather data for your location. If an installer can’t name the modeling software, that estimate was guessed or manually inflated. You can verify any production estimate by running your own numbers at pvwatts.nrel.gov for free.
Also ask: What shading deduction did you apply? If there are trees near your house and the installer shows zero shading deduction, that estimate is wrong. A properly modeled system accounts for seasonal shading patterns, not just a clear summer day.
2. The Electricity Rate Escalation Assumption
Solar’s 25-year savings projections are hugely dependent on what electricity rates do over time. Find this assumption in your proposal — it’s usually buried in the fine print or the assumptions table.
The proposals I received used electricity escalation rates ranging from 2.0% to 4.5% annually. Here’s why that matters:
- At 2.0% escalation, my system’s 25-year savings: ~$42,000
- At 3.5% escalation, same system’s 25-year savings: ~$56,000
- At 4.5% escalation: ~$68,000
The historical average electricity rate increase in the U.S. over the past 20 years is about 2.5–3.0% annually. A proposal using 4.5% is optimistic. Not impossible — some markets have seen higher — but it’s a choice that inflates the projected savings significantly. The realistic range is 2.0–3.0%. If a proposal uses anything higher, ask why.
3. Panel Degradation: The Assumption Nobody Talks About
Solar panels degrade over time. A panel rated at 400W today will not produce 400W in Year 25. Most quality panels degrade at roughly 0.5% per year — meaning by Year 25, they’re producing about 87.5% of their original rated output.
Some proposals build degradation into their production estimates. Many don’t — or they use an overly optimistic degradation rate. This is one of the most commonly fudged numbers in solar proposals.
Ask: What annual degradation rate is built into this production estimate?
If it’s not in the proposal at all, ask. If they tell you “we use the manufacturer’s warranty guarantee,” push back. The warranty guarantees a minimum output floor, not the typical degradation curve. Realistic modeling should use 0.5%/year for quality panels (Qcells, REC, Panasonic) and 0.7%/year or higher for budget panels.
The difference between 0.5% and 0.7% annual degradation, over 25 years on an 11,400 kWh/year system, is about 1,800 kWh total production — roughly $234 in savings. Not massive, but real.
4. PPA Escalator Clauses (If You’re Considering a Lease)
If you’re looking at a Power Purchase Agreement (PPA) or lease, this is the most important thing to find in the contract. Most PPAs have an annual escalator — your rate for solar electricity goes up by 2–3% per year. The sales pitch focuses on your Year 1 rate being lower than your utility rate. The proposal’s 25-year chart shows savings throughout the period. What it often obscures is that the savings gap narrows significantly in Years 15–25 as the PPA rate catches up to (or potentially exceeds) the utility rate.
Run this calculation yourself: if your PPA starts at $0.09/kWh with a 2.5% annual escalator, what’s your rate in Year 20? Answer: about $0.148/kWh. If your utility rate has grown at 2.5% from $0.13, your utility rate in Year 20 is $0.213/kWh — you’re still saving. But if utilities have grown slower (say 1.5%), your utility rate in Year 20 is $0.176/kWh and the gap has narrowed considerably.
The escalator clause is where optimistic PPA proposals assume high utility rate growth to make the math look favorable. Ask for a downside scenario: “What do my savings look like if utility rates only increase 1.5% per year?”
5. The Warranty Structure: Three Separate Warranties That Are Often Conflated
Every solar proposal mentions warranty coverage. What many fail to make clear is that there are three separate warranties, and they’re from three separate parties:
- Panel manufacturer warranty: Covers panel performance (usually 25 years at 80–87% of rated output) and product defects (typically 10–25 years depending on brand). This warranty is only as good as the manufacturer’s financial health 25 years from now. A manufacturer that goes bankrupt can’t honor a warranty.
- Inverter warranty: Typically 10–12 years standard, extendable to 20–25 years for a fee. Inverters are the component most likely to need replacement during your system’s life. Ask about the cost of an extended inverter warranty and whether it’s included in the quote.
- Installer workmanship warranty: Covers roof penetrations, wiring, mounting, and installation quality. This ranges from 1 year (a red flag) to 10–25 years. A workmanship warranty is only valid if the installer is still in business. Smaller local installers may not be around in 15 years. Ask about their workmanship warranty transferability if you sell the house.
The worst trap: an installer who says “25-year warranty” and means the panel manufacturer’s output guarantee — not their own workmanship. Get all three warranty terms in writing, separately, in the contract.
How to Compare Proposals Side by Side
This is where most homeowners struggle. Seven proposals in seven PDFs, all formatted differently, all using different assumptions. The only way to compare them honestly is to standardize the inputs.
I built a simple spreadsheet:
- System size (kW)
- Cost per watt (after any rebates, before ITC)
- Estimated Year 1 production (kWh)
- Degradation rate used in estimate
- Electricity escalation rate assumed
- Panel brand and 25-year warranty terms
- Inverter brand, warranty, and monitoring included
- Installer workmanship warranty (years)
- Installer time in business and number of installations
Using EnergySage made this easier because the platform standardizes the key data points across competing quotes automatically. I could see cost per watt, estimated production, and system specs in a single comparison view without building a spreadsheet from scratch. It’s not perfect — you still need to dig into the fine print — but it gets you 80% of the way there.
The Bottom Line
A solar proposal is a marketing document that happens to contain real data. The real data is solid — panel specs, system size, your actual roof dimensions. The projections — 25-year savings, electricity rate assumptions, degradation curves — are modeling choices that favor the seller. Your job is to find those choices, ask about them, and stress-test the assumptions.
Before signing anything, make sure you also understand how to actually claim the federal solar tax credit — it’s one of the biggest variables in your 25-year math. And once you’ve decided on financing, my post on why I paid cash and whether that was right for me walks through the tradeoffs. The installers who give you clear, honest answers when you push on these numbers are the ones you want to work with. The ones who dodge, change the subject, or tell you to “just trust the projections” are telling you something important about how they’ll handle you post-installation.