Solar panel leasing considerations

Market experts predict that in 2012 a wider variety of arrangements will be available.  Homeowners should consider comparing lease options before committing to a 25-35 year lease with any particular company.

Generally speaking, a solar panel lease involves installation of an array on your property, while the company itself retains ownership of the panels and equipment.  Because you are not purchasing the panels, solar panel leasing often requires no, or little, money down.  Instead of paying off the cost of a solar array, you pay a monthly fee to the company that owns, maintains and insures the panels.  Such fee is lower than the monthly cost of electricity you would otherwise be paying for.

So what should you consider in comparing solar lease options?

1.  The installers and solar panel manufacturers you will be dealing with through the leasing company

2.  System performance and maintenance guarantees provided under the lease

3.  Dependability of service and reputation of companies with which the leasing company works, based on customer reviews

4.  Degree of flexibility in lease terms – a longer lease with slightly more money down will usually result in more monthly savings than a short lease term with no money down.

5.  Whether the state in which you live has renewable portfolio standards that rewards owners for solar electricity generated by your system (create SREC markets) and, if so, whether you are entitled to ownership of the SRECs after the end of the lease (since they are usually retained by the leasing company through the duration of the lease).

Refer to this overview of factors to consider when comparing lease options for solar panels.

Solar panel leasing comes to Oregon

For homeowners wanting to switch to solar power, one of the biggest concerns is the upfront cost.

With a solar panel lease, you can have solar panels installed and start enjoying much cheaper electricity (and with minimal carbon emissions) with practically no money down.  This is because ownership of the solar panels stays with the manufacturer, and you only pay a small monthly fee – less than your current power bill.

Leasing solar panels is a new idea that is just starting to get traction across the U.S. and Canada.  This week, we learned that solar panel leasing is now available here in my home state of Oregon via programs offered by SolarCity®.   Residential solar leases can be obtained for as little as $20 a month!  This means that you can start saving right away, instead of trying to calculate a return on investment period as you would when you buy solar panels.

Solar panel leasing is now available in Oregon because the Oregon Department of Energy adopted new rules effective January 1 that allow customers that lease solar panels to receive the residential tax credit (RETC) that was previously only available to customers that purchased solar systems. What this means is that the system cost that is not covered by lease payments can be deferred until the homeowner receives the tax credit, eliminating any upfront costs associated with switching to solar power.

For more information how a SolarCity solar panel lease works, watch this video:

There are many financing options available to Oregon customers who wish to lease or purchase solar panels from SolarCity.   You can choose between a prepaid lease, partially prepaid lease with lower monthly payments and even cash purchase.  During the entire 15-year duration of the lease, SolarCity will monitor, repair, insure and guarantee the performance of the solar panels installed on your home.  According to Rob LaVigne, SolarCity’s regional director in Oregon:

“For less money each month than the cost of two movie tickets, Oregon homeowners can install solar power.  Our Oregon lease option should make solar accessible to a wide range of homeowners across the state.”

If you live in Oregon and are a customer of Portland General Electric or Pacific Power, you are eligible for the solar panel lease program through SolarCity.  Contact the company directly at 1-888-SOL-CITY (1-888-765-2489) for a free consultation, or visit SolarCity’s webtsite: www.solarcity.com/request.

Learn how to lease solar panels

So many people would like to convert to solar power, yet they are concerned about the upfront cost.  Government is listening, offering generous tax rebates and incentives, but still, it could take more than ten years for your return on investment.  So what else can you do?

Instead of purchasing, you can lease solar panels!  There are a number of reputable companies with which you can do business that will install, maintain and even insure the solar system on your home or business, allowing you to reap the benefits of lower electricity bills and a lighter carbon footprint.

So, you want to learn more?  You’re in the right place.  I will start by saying that before you sign any contract – and a solar panel lease is a binding contract – you may want to consult an attorney.  Because I practice real estate and land use law in the Pacific Northwest, I can offer you general guidelines regarding the contract terms you’ll want to see.

Solar panel leases were featured this week on the CBS Evening News.  The broadcast focused on a woman named Kathy Nalty who really wanted to install solar panels on her home.  She did so through a solar panel lease:

In her typical suburban house, which she shares with kids and grandma, five TVs and four computers, her electric bill went from $200-$300 a month to just $59 a month.

Ms. Nalty is charged $100 a month under the 15-year lease. With her electricity usage down, Nalty says she saves so much on electric bills that she comes out ahead about $100 each month.

Leasing solar panels can defray the initial cost

If you are interested in a solar panel lease, consider the following before you sign on the dotted line (and perhaps hire an attorney to review the contract):

1. How long will you be in your house?  Its best if you will be there for at least 12-24 month – preferably longer!
2. What is your credit score?  If its at least 640, its easier to finance or lease solar panels
3. What is an acceptable term for the lease?  5 years?  Less or more?  Make sure there are not early termination penalties, and/or that you can transfer the contract to a new owner
4. What is the monthly rental?  Will it escalate in the future?  Is it lower than your monthly electricity bills (if not, you might want to reconsider)
5. Can you renew the lease?  Can you assign the lease if you sell your property?  Take a close look at these terms!
6. Maintenance and insurance:  generally speaking the owner of the panels is responsible for these two items.  Make sure that you won’t be charged extra for these services.
7. What happens at the end of the term?  Will the company remove the panels and restore the property?  Can you purchase them for a reduced cost – like a vehicle leasing arrangement?

You don’t have to purchase solar panels to convert to renewable energy at your home or business!  When you learn how to lease solar panels, you can enjoy the multiple benefits of “going green,” without being overly concerned about how to pay for them at the outset.  And, if a lease is not for you, there are many other ways to finance solar panels to consider.

If you have questions or comments, be sure to leave them below.