Solar System Leases: Taking the Industry By Storm
Buying a solar system is similar to going to Cosco and buying a 30 year supply of a staple. It will have a large upfront cost, but will result in long-term savings in states with good solar energy potential. What if you could lease a solar system and have the savings outweigh the monthly cost?
SolarCity is changing the landscape of the residential solar market in California and the Phoenix metropolitan area by offering solar leases, which significantly reduces the upfront cost of going solar.
“Customers have called for alternatives to solar purchasing, and our innovations in financing will allow them to get the benefits of renewable energy quickly, easily and affordably,” said David Arfin, Vice President of Customer Financing at SolarCity.
The Solar Company
SolarCity takes responsibility for installing, maintaining, and monitoring the solar system. The energy output of the system can be monitored through a website, which the homeowner also has access. This allows performance issues to be addressed very quickly by SolarCity, without the customer having to notify them. The homeowner benefits from the monitoring system by easily knowing the value the system is providing.
A typical home with a $225 electric bill can have a 4 kilowatt solar system installed. At current electric rates, the system will lower the electric bill by an estimated $150 a month. As the cost of electricity increases, so do the savings. The initial cost of the system is $2,000, with a monthly payment of $125. The monthly payment will increase by 3.5% annually, but I would bet that electricity costs will go up more than that. Maintenance and repairs are free of charge to the homeowner.
Solar Finances Behind the Scene
The leasing program is made possible by a financing program that is backed by Morgan Stanley. “This transaction will allow the consumer to source environmentally friendly power without having to make a large capital investment,” said Aaron Lubowitz, Managing Director at Morgan Stanley.
SolarCity is able to take advantage of additional federal government incentives because of a tax credit that is available to companies. This lowers the overall cost of the solar system for SolarCity, with savings that are not available to homeowners. “Leasing is actually financially better for the homeowner than purchasing the system,” said Lyndon Rive, the company’s Founder and Chief Executive Officer.
Related Posts on Solar Energy:
4 Factors Slowing Solar Energy Growth in US
Senate Passes Renewable Energy Tax Credits. Why Am I Not More Excited?
Solar Thermal Electricity: Can it Replace Coal, Gas, and Oil?
The Future of the Solar Industry: An Interview with John Sedgwick
CitizenRE: Not All That’s Renewable Is Green
Computer Image Credit: SolarCity
This is an awesome idea. Too bad I can’t afford a single family home. Any chace they might find a way to offer it for condomiums or town homes?
That’s a good idea Khurt. One frequent obstacle for installing solar on condos and town homes is that the association has to approve it. They often get concerned about one town home for example looking different from the one next door. In condo buildings, typically unit owners doesn’t have roof rights. If one can get around the association, I don’t see why leasing wouldn’t be an option.
I actually have a solar system on my condo building that supplies electricity for just my unit. This however is extremely rare.
The SolarLease is an AMAZING first step to bring Solar more mainstream. However, I also own/live in a condo building. I actually called SolarCity yesterday and apparently the square footage of our roof will not provide enough kilowatts for even the common area electricity use. I am still looking into doing as much solar as we can and in the meantime I am encouraged that the lease option will help many people join the renewable energy revolution!
[...] a cool “green” gadget (usually not very green), but another to see the many forms of solar, wind, geothermal, etc., which are always changing and developing around the world. So when my [...]
Leasing solar looks great! Do you know any company or organization in eastern Virginia offering similar deals?
Unfortunately I don’t. California and the Phoenix metro area are the only locations that I know of that have such programs.
I had ASolarCity put together a proposal for my home.
The savings was all of $20.00/month on average. What they don’t tell you is that during the winter months you will pay more per month than normal and during the summer is where the savings happens. Like the story above; if you do the math; $255/month - less the $150.00 savings = $75.00 to the electric company
+ the $125.00 for the lease = $200.00 month; so you saved $25.00/month.
You’re still subject to the electric company’s rate increases + the 3.5% on the lease amount. I didn’t do it.
Considering a move to Tucson. Looking at a 1.5 acre property. 1/2 acre in solar, obviously on the ground. What would the upfront cost be and approx how much money would be returned from the city on the electricity sent to them?