A Solar Lease May Sound Great On The Surface, But Take The Time To Do The Math And You'll Probably Change Your Mind In A Hurry.
1. When you purchase a solar system, it dramatically raises your home's value as soon as you install it. But if you lease a solar system, you've created a debt liability that a potential home buyer will probably not want to assume. What potential home buyer would want to assume a lease on a used solar system that will only save him or her 6 to 15% on their electric bill. And if the potential home buyer wants nothing to do with your legally binding debt or can't qualify for the lease assumption, then you'll have to pay a hefty penalty to break your lease agreement
2. A properly installed solar system requires almost no maintenance other than a good rinsing with a garden hose occasionally to remove accumulated dust from the solar modules. Solar modules are covered under a 25 year factory warranty and inverters are covered by a 10 factory warranty.
3. A solar systems will not only pay itself off in as little as 4 to 5 years and in some cases much sooner, but will continue to make you money over its 30 to 40 year expected lifetime. This is one of the primary reasons why residential solar lease companies want you to let them use your roof.
4. Huge cash rebates are available from many states and utilities. Some as high as $6,000.00 per kilowatt. With a solar lease you won't get a rebate because you are not buying the system. The leasing company will get the rebate because they will own the system that you'll be making payments on for the next 15 years. This is another reason why residential solar lease companies want you to let them use your roof.
5. The Federal government is currently offering a 30% tax credit that's currently available for the installation of a solar electric system on your home or business. With a solar lease you won't get the 30% federal tax credit either because you are not buying the system. The leasing company will get the tax credit because they will own the system that you'll be making payments on for the next 15 years. This is another reason why residential solar lease companies want you to let them use your roof.
6. A solar electric system can earn RECs (renewable energy credits) that can be sold to entities that to offset carbon production. With a solar lease you won't earn any renewable energy credits either because you won't own the system. The leasing company will get the renewable energy credits because they will own the system that you'll be making payments on for the next 15 years. This is another reason why residential solar lease companies want you to let them use your roof.
We understand that there are consumers who simply can't afford to purchase a solar system but when you consider that you'll only be saving about 6 to 15% on your electric bill when leasing a solar system, wouldn't make more sense to take advantage of all of the rebates that are available for energy efficiency improvements that can save you even more than 6 to 15% on your energy bills without giving away your valuable roof space and locking yourself into 15 years of lease payments ?
The Leasing Company Takes All
|
Benefits/Drawbacks |
With No Solar |
Solar Lease |
Buy Solar |
|
30 % Tax Credit |
No Tax Credit |
No 30% Tax Credit to you. The tax credit goes to the solar leasing company because they own the equipment. |
Tax credit applies to you because you own the solar system. |
|
Cash Rebate From Utility Company. |
No Cash Rebate. |
No Cash rebate to you. The cash rebate goes to the solar leasing company because they own the equipment. |
Cash rebate is awarded to you because you own the solar system. |
|
Stable Monthly Cost. |
Electric Rates Have Continually Risen For Decades. |
Monthly solar lease payments are increased on an annual basis. An annual lease payment increase of 3.9% each year for 15 years is not uncommon. |
Fixed interest payments are available from many sources which can lock in your investment. The US Department of Energy publishes a consumer guide for financing solar systems. Click here to download a PDF version of their guide. |
|
Reduction Of Your Current Electric Bill |
No Reduction, Your Electric Rates Will Continue To Rise Year After Year. |
A solar system which is currently being recommended by a popular solar leasing company for a $249.00 per month electric bill in Edison territory would reduce that electric bill by $117.00 per month. The lease payment would be $132.00 per month so your monthly savings with a solar lease program would be about $15.00 per month. $15.00 per month ? Why would anyone let these people climb on their roof for a couple of days, drill lots of holes, install all of that equipment, be legally bound to a solar lease for up to 15 years on equipment that they won't own in the end, all for a savings of only $15.00 per month ? We're not exaggerating, you can visit these websites and use their online lease calculators to see the numbers for yourself. |
When you purchase a solar system, you own the system. So unlike a lease, when you finish paying off your loan you're done, that's it. The money that your system will save you on your electric bill will have increased over time because electric rates will rise and this non-taxable income will go right into your pocket year after year, decade after decade. |
|
Consequences or benefits when selling your home. |
Homes with a solar system can sell for more money than homes without solar system. |
If you cannot get your home's buyer to qualify for the solar lease (Remember your home's buyer must have excellent credit to qualify for the lease) or if your home's buyer is not interested in assuming a lease on the solar system then you are obligated to the lease. You cannot break the lease without financial consequences. |
Homes that are sold with a solar system included in the purchase price can sell for more money than homes without a solar system. Since you bought the solar system, you own it and you can do whatever you want. You can move the system to your new home or you can sell the system as part of the home's sale which will improve your home's sale price and it's marketability. |
|
Solar System Ownership/Equity After Completion Of Financing. |
No ownership or equity because no system was installed. You will continue to rent evermore expensive electricity from the utility company. |
After paying 15 years of lease payments, you will have zero ownership and will have no equity in the solar system. You will have the option, of extending your lease payments, you may also buy the system even though you've been paying for it for 15 years or you can have the solar leasing company remove the system from your roof. (Ouch, how will they match all of that 15 year old roofing material ? Who say's that they'll even try.) |
After you complete the financing of your solar system, it will continue to produce free electricity for many years to come. In fact the solar panels typically come with a 25 year warranty and have a life expectancy of more than 40 years. Inverters which have a 10 year warranty, have a life expectancy of 12 years. Inverters constitute a relatively small percentage of the overall solar system cost and are expected to drop in price over the life of your system. |
|
Renewable Energy Credits (RECs). |
No Renewable Energy Credits. |
No Renewable Energy Credits to you. The Renewable Energy Credits go to the solar leasing company because they own the equipment. |
Renewable Energy Credits apply to you because you own the solar system. |
|
System Maintenance. |
No system maintenance. Only a high monthly electric bill to maintain. |
No System Maintenance When You Lease A Solar System. That's a good one ! What maintenance ? |
That's the beauty of owning your own solar system. A properly installed solar system needs virtually no maintenance other than a good rain or a rinsing off every few months of accumulated dust on the solar panels with a simple garden hose. |
|
Benefits/Drawbacks |
No Solar |
Lease Solar |
Buy Solar |
INVESTMENT BANKERS ABSOLUTELY LOVE SOLAR LEASES
Bankers, you've got to love them. If anyone can conjure up a way to make a ton of money on a low risk, little to no maintenance investment and walk away still owning the solar system that a consumer has made 10 to 20 years worth of lease payments on, it would be a banker.
LEASE IS LESS
Just How Much More Money You Can Make When You Purchase A Solar System Instead Of Leasing ?
How About A 20.9% Rate Of Return For Starters.
|
COMPARISON |
SOLAR LEASE |
SOLAR PURCHASE |
|
System System In STC Watts |
5.64 DC kW |
5.76 DC kW (Slightly larger due to solar panel wattage) |
|
System Cost After |
$0 |
$15,894 |
|
Total Of Payments |
$16,376 Includes the annual lease payment increases. |
$15,894 |
|
System Ownership After |
Zero Ownership Nada, zip. You won't own anything after making $16,376 in lease payments ! |
100% Ownership Which dramatically increases your property value. |
|
Total Savings Over Life Of Service |
$23,040.00 In
Savings |
Remember solar
panels Even if their lease
were 25 years in length, And you wouldn't even
own their system after |
The bottom line is that it would cost you considerably more (probably in excess of $40,000.00) to lease the services of a smaller system that will save you less than half of what a purchased system would save you if both systems were used for the same 25 year period.
CLICK HERE FOR A DETAILED ANALYSIS EXAMPLE OF HOW MUCH MONEY YOU CAN MAKE WHEN YOU PURCHASE A MODERATE SIZED SOLAR SYSTEM
Why Sign A Solar Lease Agreement When PACE Municipal Finance Programs Are Now
Available In Many Areas.
What Is PACE Financing ?
PACE (Property Assessed Clean Energy) financing allows property owners to finance energy efficiency and renewable energy improvements such as solar, that are repaid through an assessment on their property taxes.
Funding is provided through various municipalities (city, county etc.) with a repayment period of up to twenty years at a competitive rate of interest.
Typically, there are no upfront cost with exception to maybe a small application fee or a deposit. And in most cases credit checks are not necessary.
Repayment obligation automatically transfers to the next property owner if the property is sold.
High upfront cost for the purchase of a solar system is the single greatest barrier to entry. The second most significant barrier is the uncertainty as to whether a potential property buyer will pay more for an energy improved property. PACE financing addresses both of the issues because it removes the upfront cost barrier and removes the uncertainty barrier as the new buyer automatically inherits the annual tax surcharge.
And unlike a solar lease, the property owner receives the cash rebate, Federal tax credit and the renewable energy credits, not the leasing company.
Click The Video To Learn More About PACE Financing