What You Need To Know About The Solar Lease
Solar Power is a great way to “go green” by reducing your carbon footprint and your dependence on oil, gas and coal. That’s enough of a motivation to switch for some people, but what really gets most Americans interested in Solar Power is the potential to save money and avoid constantly rising energy costs. Purchasing a solar power system can be costly, but leasing is a great alternative for many homeowners.
When most people think about leasing, they may be more inclined to think of a vehicle than solar panels. But leasing of solar panels is exactly what many homeowners are doing today, and it is more popular than ever. This is because it is making the installation of solar panels, which was previously out of the reach of homeowners much more affordable.
Solar leases have actually been around since the early 2000s. The number of solar power systems in California were able to be dramatically increased from just 50 in 1999 to a whopping 50,000 just twelve years later. In the last two years, rooftop solar installations have more than doubled thanks to the increased availability of solar leases, declining solar panel prices and incentive programs offered by the government.
How Solar Leases Work
Simply put, a solar lease is something offered by a company that sells solar panels. But before a solar lease can be granted, the company has to ensure that a homeowner’s roof is capable of handling a series of panels, or an array. If a roof is deemed suitable, then there may be more than one option available for leasing.
The homeowner many be able to get a solar array installed on their roof with no money down and a monthly fee, or by paying a certain amount at the outset with the goal of reducing or eliminating monthly fees. The solar company which installed the array will also maintain the system to ensure it is operating at maximum efficiency. Just as the car dealership would own a leased vehicle, so does the solar company own the arrays they lease to homeowners.
Once the end of a leasing period is reached – which is usually 15 years – the homeowner has the option to extend it, buy the array from the company outright or have the array removed.
The Advantages Of Choosing A Solar Lease
One important advantage to choosing a solar lease is that it doesn’t carry the same costs that buying does. A homeowner can pay monthly, which is much easier on the pocketbook than purchasing a system outright.
Another advantage is leasing doesn’t require the homeowner to pay the cost for maintenance. Instead, the solar company who offered the lease is responsible for this.
Lastly, the energy cost reduction for a homeowner with a solar lease may allow for a much longer lock-in rate than a utility company might offer. A homeowner may be able to lock in their rates for a decade or more with a solar lease.
The Disadvantages Associated With Solar Leasing
Homeowners who lease their solar power systems may have less flexibility due to the specifications within their contract. These specifications dictate how big an array for a particular home can be, where purchasing an array outright will not.
Having a solar lease may make it more difficult for those homeowners looking to sell their properties. This is because some may not be interested in taking on a lease in addition to the other costs associated with home ownership.
Finally, a homeowner may not be able to pay off their system early, meaning monthly payments for many months or years before the lease contract can be considered fulfilled.
Getting a solar lease also involves passing a credit check, which is something that not all homeowners may be able to do. However, recent news has revealed that solar leasing is gaining momentum, which can mean falling costs to homeowners.
Here’s a look at the top 5 reasons why leasing solar may be right for you:
Cold, Hard Cash
The simple facts of solar power are that the equipment is expensive, but pays for itself over the lifetime of the product. Unlike purchasing costly equipment, with leasing, you’ll see the financial benefits from day one. Most solar lessors will look at your electricity bill and design your system to save you 10-20% each month, that’s it. The rate never goes up and you never have to pay for the equipment.
As solar power becomes more and more popular each year, having solar equipment installed can be a very attractive box to check when it comes time to sell your home. In many metropolitan areas, green construction and alternative energy are some of the highest priority features home buyers look for. Leasing solar lets you get your home in front of more buyers without having to front-load the cost of equipment and installation.
Stabilize Energy Costs
If you’re near retirement or live on a fixed income, switching to a solar lease will let you lock in a fixed electricity rate that will never go up for the duration of the lease. This is because the lease payment is based on the amortized cost of the equipment and not on comparable electricity rates.
Go Green on a Budget
Going green may be trendy, but in many cases, it’s a luxury for most Americans. Leasing solar, among its many other benefits, allows you to join the green movement without having to jump into a huge financial commitment. If tomorrow someone offered you equipment that could run your car on the water for $3/gal, would any of us hesitate? This is essentially the deal when you sign up for a solar lease.
Option to Buy
While the savings are somewhat small month to month for a solar lease (usually $20-$50/month), owning solar equipment outright can yield savings of $1200-$2000/year for the typical household. Many solar leasing companies will allow the option to purchase the equipment while in the middle or at the end of a solar power lease. This allows you to convert your meager savings to big savings without having to turn in your equipment and reinstall newly purchased panels.
The decision to install a solar array, whether the array is leased or not should not be one that is made lightly. Installing a solar power system means being committed over the long term to not only the generation of cleaner energy but the learning curve that having a solar array installed at home involves.
As you can see, a solar lease is a great choice for most homeowners, but admittedly, it’s not for everyone. Consider your options. Calculate the cost to own vs. lease over the amount of time you intend to stay in your home. Most importantly, do your research, because the longer you put it off, the longer you pay more than you need to for energy.