[social_buttons]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.
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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.
The Solar Homeowner
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.
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- The Future of the Solar Industry: An Interview with John Sedgwick
- CitizenRE: Not All That’s Renewable Is Green
Computer Image Credit: SolarCity