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Clean Power Graph_3rd_Party_Solar_Titled

Published on April 16th, 2012 | by Zachary Shahan

19

Solar Leasing & Solar PPAs — Some of the More Hidden Benefits

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April 16th, 2012 by Zachary Shahan 

Last time I wrote on the popularity of going solar through a service (i.e. solar leasing or going solar through a PPA), someone from Sunrun (a leading solar service company) got in touch with me and we had a nice back-and-forth about more of the details of going solar through Sunrun. I’ve been meaning to come back to writing a post about that since then.

Basically, the discussion centered around some of the more hidden benefits of going solar through solar leasing or PPAs — in particular, for those who can afford it, going with a prepaid solar service vs. owning a system. One big benefit of going with a prepaid solar service is that companies like Sunrun are sometimes eligible for subsidies that individuals/households are not eligible for. So, the overall cut in cost can be greater than going solar on your own. Policies vary from location to location and for people in different tax situations, so, as always, it’s worth getting as much info as you can on different solar options before deciding on the option that’s best for you.

Another somewhat hidden benefit is that people going solar through a third party generally don’t have to worry about maintenance of the system because the third party will often cover maintenance and monitoring of the system for the entire 20-year contract of the lease or PPA. Many inverters are not guaranteed for 20 years and will die before that time. Under a 20-year solar leasing or PPA contract, Sunrun would notice the inverter failure through monitoring of the system and would replace it without charging the homeowner an extra dime.

Some nice benefits. It’s no wonder about 70% of households going solar in California are now going solar through such third-party solar services.

Image Credits: Sunrun

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About the Author

spends most of his time here on CleanTechnica as the director/chief editor. Otherwise, he's probably enthusiastically fulfilling his duties as the director/editor of Solar Love, EV Obsession, Planetsave, or Bikocity. Zach is recognized globally as a solar energy, electric car, and wind energy expert. If you would like him to speak at a related conference or event, connect with him via social media. You can connect with Zach on any popular social networking site you like. Links to all of his main social media profiles are on ZacharyShahan.com.



  • Brigoulette

    Think twice before using one of these companies. We paid 50% of our solar panels and went with Sunrun to keep cost down. Now 5 yrs later we’re delayed by Sunrun to start a remodel where 40% panels must come down temporarily and we are not even able to get competitive bids between their installers because Sunrun refuses to give us their contacts.
    Using such a company was our biggest mistake going solar

  • Pingback: 97% of Americans Overestimate Cost of Installing Solar Panels - CleanTechnica

  • Studiggs

    Would still like to know what incentives a leasing corporation gets that a consumer does not…I bet it is yet another tax deduction on the depreciation of the system over the first 5 years. Man, SunRun et al is making a killing…thier initial investment is paid off by the taxpayers in two years and they collect royalties for the next 20. I do like that solar is gaining popularity in the US…the more systems people can see in their neighborhood, the more they will forget the negative spin Big Oil and Fox News lays on solar, but come on people, do some 5th grade math before you sign a lease…hire a contractor or do a DIY with a credit card and your solar IRR will still cover the interest. then after you pay VISA back in 20 years, you still have 5 years of warranted (and 10 or more out-of-warranty years) of free electricity.

  • Stan

    The reality, as with most anything, is just that, the reality….
    Having a system has some more facets than has been discussed….here are a few, so that you may better understand what I’m talking about….
    Here are a few reason why people who are financially motovated to get solar, cannot GET a system unless they lease…..which is the primary reason many people lease their systems, besides having the unfortunate experience of having a “used car salesman” come to their home.
    1. You have a 2nd mortgage
    2. Your income is so low, you have no tax obligation to recoup as tax credits
    3. You have no equity in your home….
    4. You have a credit score lower then the lending inststutuons allow (this is a factor in leasing to though.
    5. You have an unacceptable debt to income ratio

    With leasing….you only need:
    1. A good credit score
    2. You are not an obvious forclosure candidate

  • Kirkton007

    Studiggs, you are 100% right! These leasing companies are scamming the consumers. You will get a far better return on investment from purchasing a solar system than leasing. The leasing companies are taking all of the tax and other incentives and pocketing the money. They make huge profits and pay no tax, this is not what the incentives were designed for, they were supposed to be for the home owner.
    Enphase and Solar Edge both come with a 25 year warranty, there is NO maintenance on a solar system and anyone that understands financing will tell you if you own your home it is very easy to get the financing for the Solar system.
    This article is just another advertisement from the leasing companies, trying to fool more people into their scam.
    Clean Technia, Please stop running these ads, do a real cost comparison, get the facts straight.

    • http://cleantechnica.com/ Zachary Shahan

      Will see if I can get a site-specific comparison — or, if you can provide one, I’d be happy to feature it.

  • http://pulse.yahoo.com/_5EDH4U3H2CBS2FPMW3OZIIHVHQ Ron

    Studiggs is absolutely right. There is no maintenance involved in a properly installed PV system. “Maintenance” is nothing but a scare tactic practiced by the leasing companies. SolarEdge is another company that offers a 25 year warranty for very little cost on their inverters and some dealers are offering a free upgrade to 25 years. SolarEdge also includes free module level monitoring and a much higher wattage and a much better efficiency rating than Enphase. Add up the payments on a solar lease and you’ll find that you’ll pay four to five times more for a leased system when compared to a purchased system and after making all those payment you won’t even own the system. And good luck if you ever want to sell your home with an outdated leased system on your roof. No homebuyer will want anything to do with assuming your lease payments. And Lukealization obviously knows very little about solar because there are no batteries in a typical grid tie solar system. And no leasing company will ever offer batteries in their leased systems due to the drop in efficiency. Nor are their any charge controllers or a “capital outlay” involved in a grid tie connection. “The people who can’t afford solar” as Lukelization puts it will get reamed in the end after signing a solar lease contract for twenty years because they would have been far better off financially by simply continuing to pay their existing electric bill. Solar leasing will be remembered as the biggest scam perpetrated on the American public. And in a few years there will be a lot of angry consumers that will wonder why they ever signed that airtight leasing agreement.

    • lukealization

      “And Lukealization obviously knows very little about solar because there are no batteries in a typical grid tie solar system”

      Ron, you just hit the piss-me-off jackpot. Considering I built and essentially wired my own PV system from the ground up – I would say I know quite a bit about solar.

      Most grid-tie connections in New Zealand have a dedicated battery bank with them. Why? When there’s a blackout, you’re required to stop selling your power to the grid. And when that happens, the battery bank takes over providing a source of power to your house. Because really, why should you have to participate in the blackout as well when you’ve got a running wind turbine/rooftop PV system.

      You could very happily be consuming power during a blackout while your neighborhood is in darkness.

      AND I’m not actually grid-tied because I wired it myself, and since I’m not a licensed electrician I can’t connect to the grid legally. I could however very easily get an electrician to come over and check my work and have him wire me up.

      I simply have a off-grid PV system powering a few components (computer, TV, other gadgetry, clocks) and leave the rest (lighting, fridges, freezers, stoves) connected to the grid normally.

      Anyway, the entire gist of my comment was an either-or statement. You may not have all the components I listed, but you will have some of them.

      Learn about me FIRST before you go making snarky remarks like that.

      • Jerry3130

        How often is there a black-out in New Zealand? once a month? Just curious.

        • Luke

          It depends on how often they’re doing line work, and whether the grid is being run by negligent idiots at the time.

          Maybe a dozen times a year… once a month?

      • Kirkton007

        Luke, First let me say congratulations for building and wiring up you own system (even though it is a small system). Most people don’t have the understanding to get it done, including a few batteries for backup.
        Alternatively, I have to say studiggs is still correct when he is speaking about the leasing companies fooling consumers into their trap. A typical solar electric system properly installed will provide ALL of your home or business electrical needs and pay for itself in about five years. There is NO maintenance, you will have no electric bill and anyone can purchase one if the financing is done right. Let me ask you…Would you leas your car for 20 years and still not own it? Would you lease your home for 20 years and still not own it? Why then would you lease a solar system for 20 years and still not own it?

        • Luke

          Okay, firstly, thanks for not jumping out and personally attacking me right off the bat…

          I’d have to say we’re all very lucky here, we all have access to the internet, probably have nice homes, and have a good class of living.

          Some people can’t afford luxuries, and they aren’t very well of at all. If solar leasing provides even the slightest drop in how much they have to cough up each month, I’d say let them have it.

          It may not sound like a fantastic deal to us, but I do think that we need to keep all options on the table so different people of different economic statuses get a choice. The capital cost of going solar for some on a lower income will still look huge…

  • Studiggs

    Enphase inverters are warranted for 25 years by the manufacturer.

    • lukealization

      Yeah, because nothing has ever broken under a company warranty.

  • Studiggs

    Article is useless. 1st, A consumer who buys rather than leases their solar system sees up to 100% reduction in an electricity bill and 50% of the install cost paid for by tax incentives and rebates. What exactly are these benefits that a corporation can get that a consumer cannot? Specifics would be helpful. 2nd. There is no maintenance on a solar PV system. Any PV system installed in CA comes with a mandatory 10 year service warranty from the installer. Other than hosing it off once per year (if so inclined) there is nothing to maintain. This article is a thinly veiled and poorly written advertisement by a large solar power corporation who are making profits off uninformed consumers, by selling them leases. Bottom line. Max return is always seen by buying your own PV system. Payoff in 5 years at current rates, and an IRR of over 20% beats even the worst HELOC loan rates. If you are a consumer. Do the math and do a little work to secure your own financing before leasing.

    • lukealization

      Don’t be so liberal with your hate. What about those who can’t afford the capital cost to outright buy solar panels, the inverter, the batteries, the grid-tie connection, the charge controller, the breaks and the fuses?

      The people that can’t afford solar are the ones that need it most – they need a cheap or nonexistent energy bill. Solar leasing provides a way around the initial capital cost.

      And BTW – the best way for going solar is not buying your own system, it’s doing the hard yards and building it yourself.

      Good article Zachary, haters will always hate!

    • robrjohnson

      Old post but the biggest advantage a company can realize that a consumer cannot is that a company can claim depreciation on the equipment. It reduces their tax liability. I don’t know the terms but say they can depreciate the system over 5 years. If the system cost $25,000, they can write off $5000 of depreciation per year per system for 5 years. As a private owner, you don’t get to depreciate the equipment.

      • Bob_Wallace

        Yes, but remember that you’re talking about a deduction and not a credit.
        If the company is paying the federal tax rate of about 35% then the $5,000 write off is worth $1,750 in reduced taxes. That still counts but it’s not $5k.

        • robrjohnson

          No doubt. I was just pointing out there is a benefit available to a company that isn’t available to the average owner.

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