Solar Leasing

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solar-energy-homeTwo major concerns of today’s homeowners are saving money and having a more energy efficient home. Solar energy has been financially out of reach for most people for a long time. Over the past few years, though, the price of panels has come down to a more affordable rate. Still, finding the upfront money for an installation is difficult, especially in this economy.

Leasing is the new trend that satisfies these needs of saving money and being energy efficient. People leasing solar PV and thermal (hot water) save money on their bills and reduce their carbon footprint without the huge upfront payout for purchasing a system.

Challenges to buying into solar energy

As the prices of systems dropped, though, so have government incentives. Despite the reduced cost to taxpayers, this made purchasing less attractive and gave leasing a chance to fill that niche and take off. As of 2013, only 14 states offer leasing programs. California is in the lead, Arizona second, and New Jersey is not far behind.

According to the Solar Energy Industries Association (SEIA), PV installations have risen tenfold since 2008. When I see information like that, my mind says that’s quite a bit of coal not mined and burned! That’s a good thing.

One myth of solar energy is that you need the sunshine of California or the southwest for it to work. Not true! Homeowners in areas with considerable cloud cover and precipitation, such as the northern US, never looked into it because of that. They didn’t understand how it works or its benefits, but leasing became a way to learn about it without the risk of an expensive purchase.

Solar leasing is win/win

So leasing is a win/win. Homeowners save money on utility bills, they make their homes more energy efficient, and they learn about the benefits of solar energy. Maybe their skeptical neighbors now become interested in solar energy, and the word gets passed along. More education results in more solar installations.

Leasing does not come without its drawbacks and critics, though. My main concern is that homeowners do not get the 30% federal tax credit for the system cost. The company installing and servicing the system gets to take advantage of that. I would hope that a company with that many tax breaks would pass those savings down to the consumer, but I have not done enough research to see if they are doing that. Local utility rebates are also out of the hands of the homeowner.

A solar leasing scenario

These incentives are what make solar attractive and affordable. I crunched numbers when I installed solar thermal, and they made a big difference! Those who lease do not get this benefit on top of reduced energy bills. The government should consider changing where the incentive goes. The homeowner uses the system to his advantage. The installer just installs and maintains it at a profit. I think the homeowner deserves a break.

A leased system may be a negative when the house goes up for sale. A solar system has a life span of 20-30 years, and the average person moves every 7 years. A new owner may not want to assume the 20-year lease with the ‘logic’ that they are paying for a used system. The homeowner may have to pay off the lease as a contingency for a house sale. The buyer, though, should do some homework and some math to see if there is a saving with the lease. They need to understand how durable and long lasting a solar system is. And they need to take into consideration that the installer does all the repairs and maintenance.

Some homeowners have complained that they did not realize the high monthly savings the installer promised. The ads claim that monthly bills, which include the lease fee, are still less than what the owner was previously paying for energy. Some say this was not true for them.

A good idea

I think leasing is a good idea. I would definitely like to see policy changed to benefit the homeowner, though. But like leasing anything, it’s a no-worry scenario. The installer does a site survey, develops an appropriate system, installs it, maintains it and repairs it. The homeowner just has to enjoy energy from the sun for a cost that fits her budget. It’s usually the bottom line that m

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Nan Fischer

Nan Fischer has been living and building green for over 35 years. Nan’s emphasis on the BuildDirect blog is about how to make your dollar stretch further, while also moving toward a more sustainable lifestyle, as well as upcoming and existing technology to help us live in an ecologically-friendly way. Nan also authors posts on the website of her seed business, sweetly seeds.