Sunrun Solar Quote With a 2.9% Escalator: What Houston Homeowners Should Know
The short answer: a 2.9% escalator means your Sunrun solar payment (or per-kWh rate) goes up by 2.9% every year for the life of the contract. Your bill starts lower than your current electric bill, but by around year 25 it will have roughly doubled. Whether that is a good deal depends on how fast your Houston electricity rates rise, how much of your usage the panels cover, and what other options you have.
This guide explains how the escalator works, shows the math with an example, and lists the questions to ask before you sign. The numbers are illustrations, not a quote. Your own contract controls.
What Is a Solar Escalator?
An escalator is a built-in annual price increase in a solar lease or power purchase agreement (PPA). Instead of a flat rate, the amount you pay grows by a fixed percentage each year. A 2.9% escalator means that every contract anniversary, the price rises by 2.9% over the previous year.
Companies offer escalators because they lower the starting payment. A contract with a 0% escalator usually has a higher first-year payment. One with a higher escalator can look cheaper on day one. The sales pitch often emphasizes the first-year savings, so always look at the full payment schedule.
Lease vs. PPA: where the escalator applies
- Solar lease: you pay a fixed monthly amount for the system, and the escalator raises that amount each year, regardless of how much power the panels produce.
- Solar PPA: you pay a price per kilowatt-hour the panels produce, and the escalator raises that rate each year. Your bill also depends on production.
- Solar loan or cash purchase: there is typically no escalator, because you own the system and pay a fixed loan payment or nothing after the purchase.
Check your paperwork to see which structure you have been offered. The quote may use the word "lease" for something that behaves like a PPA, or the reverse.
How a 2.9% Escalator Compounds Over Time
The increase is applied to the previous year's amount, so it compounds. Here is a hypothetical example using a starting payment of $150 per month.
| Contract Year | Approx. Monthly Payment | Increase vs. Year 1 |
|---|---|---|
| 1 | $150.00 | 0% |
| 5 | $168.17 | +12% |
| 10 | $194.00 | +29% |
| 15 | $223.81 | +49% |
| 20 | $258.20 | +72% |
| 25 | $297.87 | +99% |
The key point: over a 25-year term, this example adds up to roughly $64,800 in total payments. The same $150 per month with no escalator would total $45,000. The escalator adds close to $19,800 over the life of the contract.
The difference does not mean the contract is a bad deal. The utility bill you would otherwise pay also changes over 25 years. It just means the comparison has to be made year by year, not only on the first month.
Is a 2.9% Escalator Worth It in Houston?
The escalator pays off only if your grid electricity would have risen faster than 2.9% per year, or if the first-year savings are large enough to offset later years. That depends on factors specific to Texas.
The Texas market works differently
Most of Houston is in the deregulated retail electricity market, where you choose a retail electric provider (REP) and plan. CenterPoint Energy delivers the power, but the price you pay per kWh is set by your REP plan. This matters for solar in three ways:
- Your rate is not fixed by the utility. It depends on the plan you pick, and it can change when you switch or renew. You can compare today's rate against the solar contract, but your future grid rate is uncertain.
- There is no statewide net metering rule. Credit for the extra power you send to the grid depends on your REP's buyback plan, and these vary widely. Solar savings may be smaller than a sales estimate that assumes full retail credit.
- Sizing matters. If the system is designed to cover your daytime usage and you export little, buyback terms matter less. If it exports a lot, they matter more.
A simple break-even test
- Get the year-by-year payment schedule from the contract, not just the year-1 number.
- List your current annual electricity cost and the REP plan you are on.
- Estimate what you would still pay the REP after solar (fees, usage the panels do not cover, and any export credits).
- Compare the solar payment plus the remaining REP bill against your current bill, for years 1, 10, 20 and 25.
- Repeat with a conservative assumption, such as grid rates staying flat, and with a higher one. If solar only wins in the optimistic case, treat the deal as risky.
Questions to Ask Sunrun Before You Sign
Ask for answers in writing. These are the points that most often change the real cost.
- Is this a lease or a PPA? Does the escalator apply to a fixed payment or to a per-kWh rate?
- Is the escalator fixed at 2.9% for the entire term? Are there other fees that also increase?
- What is the full payment schedule for every year of the contract?
- What is the contract length, and what happens at the end: renewal, removal or purchase?
- What is the production guarantee, and what remedy do you get if the system underperforms?
- What happens if you sell the house? Can a buyer assume the contract, and could a lien or filing against the property complicate the sale?
- What if you need to remove the panels for a roof repair or replacement, and who pays?
- Can you buy out the system early, and how is the buyout price calculated?
- Is there a lower-escalator or no-escalator option, and how much higher is the starting payment?
- Who is responsible for maintenance, monitoring and insurance, and what are the contact and response terms?
Comparing Your Options
| Option | Upfront Cost | Price Increases | Main Trade-off |
|---|---|---|---|
| Lease or PPA with escalator | Usually low or none | Yes, fixed annually | Payments climb; the company owns the system |
| Lease or PPA with 0% escalator | Usually low or none | No | Higher starting payment |
| Solar loan | Low to moderate | No (fixed payment) | You own it, but you carry the debt and interest |
| Cash purchase | Highest | None | Large upfront outlay; payback takes years |
| No solar | None | Depends on your REP plan | No savings, no long-term commitment |
Incentives have changed recently. The federal residential tax credit that applied to purchased systems was scheduled to end for spending after 2025, and rules for leased systems differ. Confirm what applies to your situation with a tax professional and the current IRS guidance before you rely on any incentive in a comparison.
Common Mistakes When Reading a Solar Quote
- Judging by year 1 only. The first-year saving is the best year of the contract.
- Assuming rates will always rise faster than the escalator. That is a forecast, not a guarantee.
- Ignoring export credits. In Texas, buyback terms depend on the REP and can change.
- Not planning for a home sale or roof work. These are the moments when a long contract causes friction.
- Comparing different system sizes. A cheaper payment on a smaller system may leave you with a larger remaining electric bill.
- Relying on verbal promises. If it matters, it should be in the signed agreement.
Frequently Asked Questions
Does a 2.9% escalator mean my bill rises 2.9% in total?
No. It rises 2.9% each year, compounding. After 25 years the payment is about double the starting amount.
Can I negotiate the escalator?
Sometimes the company offers several escalator options with different starting payments. Ask for each version in writing and compare them side by side. Getting a competing quote also helps you judge whether the offer is reasonable.
Is a 2.9% escalator high?
Whether it is high depends on what rates your grid supply is likely to follow and how it compares with alternative offers. A fixed percentage is predictable, but if your electricity rate stays flat, a 2.9% escalator can erode the savings over time.
What if I sell my home before the contract ends?
Typically the contract must be transferred to the buyer or bought out. Ask the company how this process works and what fees apply before you sign, since a buyer's willingness to assume the contract can affect the sale.
Should I get other quotes?
Yes. Comparing at least two or three offers, including a loan or purchase option, is the simplest way to see whether the escalator terms are competitive.
Bottom Line
A 2.9% escalator is not a trap by itself, but it changes the deal from "cheaper than my utility bill" to "cheaper for now, with a rising cost later." Before signing, ask for the full year-by-year schedule, test the numbers against flat and rising electricity rates, and read the transfer and removal terms closely. If the savings only work under optimistic assumptions, ask for a lower-escalator option or compare a loan or purchase.
Next step: compare your quote with at least one other offer, or read a related guide on solar leases, PPAs and loans.