I recently ran a small, informal poll on a couple of solar (and related) online discussion groups, asking if respondents had installed solar on their own property, and if not, why not.
Results showed, without a doubt, the two most frequent reasons people had not already implemented solar were: (1) the cost; and (2) they needed to learn more before investing.
Since solar on a national basis is still slow to catch on in the United States, let’s assume for a moment that the aforementioned two reasons are valid. Now let’s see if we can find a solution that solves both problems.
Leasing:
Have you considered ‘leasing’ a Solar System for your home or office?
It’s a possibility.
Leasing a solar system is much like leasing a car or truck. Someone else owns it. Since you don’t own it, you don’t have to learn how to maintain it, install it, service it, or even understand it (though the last part is a good idea). That off-loads much of the learning curve of solar system ownership.
As for the cost problem, the current trend in lease offering is that, if you qualify (i.e. your home has enough sun exposure, your community allows solar, your utility offers acceptable purchase rates, and a few other criteria which the leasing company will normally look into for you before spending much time on your account), the leasing company will usually charge you nothing to enter into the lease. In other words, no up-front costs to you, ‘zero’.
For many lease programs the leasing company owns the equipment. They pay a local installation company to install the system. The system has a monitoring system built into it (which is inherently in most solar electric systems). If something goes wrong, the system should notify them immediately so they can have a service provider stop by and fix the issue. The leasing company sells 100% of the electricity produced by the solar system on your roof at a fixed rate, which they contract for in advance with the power utility. The rate is set in that agreement. The leasing company pays you for a portion of those dollars the solar system produces, using your portion as an offset of the utility bill you would have paid had you not leased the system. This nets the lessee a reduced electric bill, not a check in the mail. The leasing company keeps its share of the funds the utility pays for the electricity the solar system creates, which is needed to pay for the solar system, the installation, ongoing monitoring, and any servicing.
So, which is better — to own or lease?
As you can guess, “That depends.”
Leasing versus Owning:
If you like this simplified system (leasing), compared to having to expend effort to learn, understand, and take on the responsibilities of ownership, then leasing can probably get it done for you.
Obviously, you are not going to earn as much in income or savings on your electric bill compared to owning; but then again, you don’t have to worry about a major component failing, such as an inverter, which can run $250 or $6,000, or more, not including the costs to troubleshoot the problem, re-install the new unit, get a permit, and hire a certified electrician to do the work. Personally, if I were to lease, I would want to know what those figures were before making a decision whether to buy or lease; and then put pencil-to-paper and see how it works out.
Not so obvious, a benefit of leasing is not having to be involved in choosing an installation company, which can be a nightmare all onto itself. How do you tell which one is better? Do you pick by who’s been around the longest or done the most installs? Personally, I wouldn’t. Do you go by who has the most certifications? (Not me!) Do you use separate contractors; one for the roofing integration part, another for the electrical wiring, and another for integrating the components? (Not all solar installers are registered electricians…..). With leasing, those decisions are left to the leasing company. (If your roof leaks afterwards, or the lights go out, you have one organization to deal with. Just make sure those terms are in your lease agreement documents. If they aren’t, my recommendation is to add an addendum.) It happens, whether you have solar or not. Any of those things can happen whether you purchase or lease. The question becomes, “Who’s liable?” And that brings up the consideration of liability, which means insurance. I suggest you have a conversation with your insurance agent. Odds are, your agent will not have a lot of experience in solar coverage, so I would suggest getting the telephone number for the underwriting department at the insurance company and give them a call. I would ask them, not just what it would cost to own or lease; but also, what’s the extent of the coverage they offer and the terms. Ask to see the policy they would issue.
Considerations:
What if you want or need to sell your home before the end of a solar lease? Is that potential issue covered in the lease documents? Does the lease allow the new home owner to continue the existing lease; or, do they have to initiate a new lease? Or, at the option of the new owner, can the lease be terminated, and the equipment removed at the leasing company’s expense? How will the roof look if the system is removed? Let’s admit it, if you need to relocate, and you need to get your house sold, the one thing you don’t want is a ‘deal breaker’ that a potential buyer doesn’t understand. They might love the idea that solar is already installed or, they might not.
Considering the above information, you can probably see how leasing can eliminate a lot of expense and detail work, not to mention headaches. For me, that’s where the value comes in. I also believe that for many, not all, but many home or property owners, leasing is a viable option. What would really make it nice in my opinion, is a lease with an option to purchase the system (a buy-out) in the future; say ten years as an example. Or, perhaps limiting the term of the lease. That way, the property owner would have the option to become acquainted with the system, become comfortable with it, and better understand further options.
A solar system is much like a furnace or water heater once it’s installed and working, you don’t much pay attention to it each day. How many people do you know who visit their water heater or furnace every morning or night to ‘check on it’ or brag to the neighbors about how great it is? Look at how much progress we have made in solar PV technology in the last ten years. Micro Inverters are now the rage, and cost effective. Monitoring companies and systems have evolved and are now very inexpensive. Solar modules (the panels) have made huge strides in efficiency and price reductions. You can only guess at how it will all change in the next ten years. When it does, do you think you will want to continue to use the system you leased or purchased today; or, do you think you will want to up-grade sooner than twenty, thirty or forty years from now? Remember how explosive the personal computer technology became in the 1990’s. There was something new every six months, and a lot of new computers were sold, making the existing ones obsolete, very fast.
Conclusion:
So, do we have an answer to the question of whether to purchase or lease? “Well, that depends…” It’s a personal choice, The best advice I can offer is to be aware of all your options, as many of the alternatives as possible, and walk through as many scenarios looking forward, as possible.
What I’ve covered in this brief article is not a complete list of considerations, by any means. (However, I do believe it has covered a few you might be unaware of.)
Consider your options. If the rates were ‘right’, the terms included my wants, and I could rest assured that any problems would be remedied to my satisfaction (as compared to the satisfaction of the other parties), I would strongly consider leasing. It would keep local installers employed. It would get me to my goals of a cleaner climate and reduced fossil fuel dependence quicker; and it would give me bragging rights in the neighborhood. (That last one is a ‘guy thing’.)
August 16, 2011
