Solar Lease Good Idea?

June 2nd 2016 1 comment

Unfortunately for consumers across the country, low interest rate solar leasing company loans, power purchase agreements and solar leases are three of the most expensive ways to have solar on your roof. Up to three times the cost of a purchased system from a local or regional dealer using the same name high quality, reliable equipment..

Solar Lease Good Idea

The low interest rate loans offered by the solar leasing companies may appear enticing at first glance but these low interest rate programs are very expensive for the leasing companies and in the end for the system purchaser. They are known as "buy down loans" and can cost the leasing company thousand of dollars in fees which are simply padded into the price of the system.

While many fair market priced solar dealers are installing systems for less that $2.70 per Watt, the solar lease companies that are selling low interest rate loan programs are pricing their systems between $4.50 to well over $5.00 per Watt, completely wiping out any savings that a low interest rate loan might yield.

To put this into perspective, a typical 5 kW grid tied solar system from a fair market priced solar dealer would cost you less than $13,500 before incentives while the same 5 kW grid tie solar system from a solar leasing company will cost you up to $30,000 before the same incentives!.

Solar leases and power purchase agreements will typically only save you about 10% to 15% on your electric bill after you factor in the monthly lease/PPA payment.

Not only are you forfeiting the lucrative 30% federal tax credit worth thousands of dollars but to make matters worse, most if not all $0 down solar leases include an annual payment escalator that will increase your monthly payment by up to 2.9% per year, every year for 20 years. A lease payment that may start at $80 per month can run into the hundreds of dollars toward the end of a lease contract.

Imagine what would happen if your utility company decides to, or is ever mandated to add fees or decrease their net metering compensation like what just happened in Nevada. On a lease with annual payment increases, you could end up being forced to pay more for your electricity than if you never had signed that air tight, escalating solar lease contract in the first place.

You'll typically pay so much more to purchase or lease a system from a solar leasing company than a purchase from a local or regional non-leasing dealer, that's it's actually you who will be over-paying to maintain, monitor and insure the solar lease company's property.

You'll probably have problems selling your home with a solar lease or power purchase agreement attached to it. What home buyer will want to assume your remaining lease payments on a used, outdated solar system when they can own a brand new system with the latest technology and keep the 30% federal tax credit for thousands less.

Don't believe it ? Well then simply type the keywords "solar lease scaring buyers" into Google and you can read many accounts of homeowners and real estate professionals reporting difficulty when trying to sell a home with a 20 year solar lease or PPA attached to it.

You'll not only have to forfeit the 30% federal tax credit but also any applicable cash rebate to the leasing company and you won't get tax deductible interest on your lease payments. By purchasing your system with a $0 down FHA solar loan or PACE financing instead, you'll not only get a much lower price when buying from a local or regional dealer, but you may qualify for tax deductible interest. Solar leases and power purchase agreements don't offer tax deductible interest.

And after making 20 years worth of solar lease payments, you won't even own the system. It will still belong to the leasing company. If you want to own their system after making all those payment, then you'll have to buy it from the leasing company at the end of your lease at fair market value.

Add up all of the disadvantages that a solar leasing company loan, solar lease or power purchase agreement offer and you'll find that none of these forms of financing makes much sense in today's much lower priced solar market.

 

 

 


1 COMMENT

TrenttJune 5rd, 2016 4:29 pm

Leasing solar is foolish. It's way better to own solar like it's better to own a home..

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