If you read this blog–or are otherwise invested in following solar in this country–you know that the cost of a residential solar installation can be intimidatingly high, even after the excellent incentives in many states have been applied. If you have a good site and live in a good state for solar, a PV system can be one of the smartest investments you can make in your home. But for many, they just can’t locate the capital or take on the increased debt burden, even to achieve the energy savings and increased energy security that solar offers.
Which is where solar leasing comes in. It’s an approach to solar financing with quite a mix of pros and cons, and it’s gaining some popular appeal in these times of economic hardship. Why? Well, as with any leasing program, it requires very little money down (comparatively speaking). For very little or even no money down, you can have a solar electric system installed on your roof and providing you with clean energy. This past week alone, solar installers in Arizona, Massachusetts, and Connecticut have come out with new leasing programs for their service territories.
With a solar lease, you pay a fixed monthly sum to the company that installed the system. That sum covers not only the cost of the lease, but the cost of your home’s electricity; the total figure is calculated to come out at less than what you had been previously paying for electricity alone.
Sound too good to be true? It is, and it isn’t. Say you were paying $150/month before your solar lease went into effect. Now you might be paying $120/month for lease and electric combined. Positive cash flow, predictable utility expenditure for the next decade or two, warm-fuzzies all around. But in most states, a solar PV system is eligible for a variety of tax credits, tax exemptions, and cash rebates (and in New Jersey, ownership of the Renewable Energy Credits accrued by your system). In a leasing program, you do not receive these benefits: the owner/installer of the system does. That’s why it’s a good deal for them, and why they’re able to make it a good deal for you.
You can usually opt to buy the remainder of the lease from the installer at any point. And when you sell your home, you can transfer the balance of the lease to the new owner. Solar leasing is a good option if you want to make clean energy a priority, and lock in energy prices for the future. Just keep in mind that if you can finance or outright pay for a solar electric system for your home, the benefits and ROI make it absolutely worth your while to do so. In states with good incentives, the correctly sized PV system can pay for itself in a handful of years and bring your net electric costs to a bare minimum–if not to zero.
Take a look at Adam’s concise, helpful guide to the major three financing choices for solar (Buy, Borrow, or Lease) to see how leasing stands up against the other options, and take a look at our white paper (PDF) on solar financing to dig a little deeper.
New blog post: Solar leasing on the rise http://www.getsolar.com/blog/solar-leasing-on-the-rise/