Green Economy

Published on April 17th, 2008 | by Sarah Lozanova

18

Solar System Leases: Taking the Industry By Storm

April 17th, 2008 by  

solar panels, solar house, solar electricity[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.

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.

solar energy monitoring system,

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.

Related Posts on Solar Energy:

Computer Image Credit: SolarCity


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About the Author

is passionate about the new green economy and renewable energy. Sarah's experience includes work with small-scale solar energy installations and utility-scale wind farms. She earned an MBA in sustainable management from the Presidio Graduate School and is a co-founder of Trees Across the Miles, an urban reforestation initiative. When she can escape the internet vortex, she enjoys playing in the forest, paddling down rivers, or twisting into yoga poses.



  • Charlest

    Our company offers a great solar leasing program here in Arizona. In many cases the monthly payments are less than the utility savings. Give us a call at 623-975-2313 or visit us online at http://saltriverenergy.com to see what we can do for you.

    🙂

  • Tom Kuenzi

    I agree with Ron Winton, BUY do not lease!

    Everything is in favor of the leasing company. Wait until you want to sell your home “the new buyer” had better want to sign up and take over your lease or YOU will have a LARGE balloon payment to fork over before you can close the deal.

    I have an adverage $400 a month power bill, my proposed system would cover 75% of my useage “IF EVERYTHING IS PERFECT” NO bad weather, no clouds & no dust on panels, to perform at “good” never perfect.

    I would spend $50k+ over 15yr. lease and own nothing for a system i could have installed for 30k LOCKING IN MY COSTS almost forever, adding value to my home and OWNING the system, It WILL NOT cost 20k to maintain the system over 15yrs or even 30,40,50.

  • Tom Kuenzi

    I agree with Ron Winton, BUY do not lease!

    Everything is in favor of the leasing company. Wait until you want to sell your home “the new buyer” had better want to sign up and take over your lease or YOU will have a LARGE balloon payment to fork over before you can close the deal.

    I have an adverage $400 a month power bill, my proposed system would cover 75% of my useage “IF EVERYTHING IS PERFECT” NO bad weather, no clouds & no dust on panels, to perform at “good” never perfect.

    I would spend $50k+ over 15yr. lease and own nothing for a system i could have installed for 30k LOCKING IN MY COSTS almost forever, adding value to my home and OWNING the system, It WILL NOT cost 20k to maintain the system over 15yrs or even 30,40,50.

  • When you lease a solar system you don’t get the new 30% tax credit or the huge cash rebate or the valuable RECs(renewable energy credits) and all you’de be lucky to save after going through all the trouble of being locked into a lease for all those years is typically only $25.00 a month. And after more than 10 to 15 years of payment you would own absolutely nothing. You’re far more better off to buy a system using traditional financing and not only will you get all of the financial incentives mentioned above but you’ll also own a system that will put cash into your pocket every month for another 30 to 40 years after you’ve paid it off. Lease a solar system…..I don’t think so ! Buying one makes alot more sense.

  • When you lease a solar system you don’t get the new 30% tax credit or the huge cash rebate or the valuable RECs(renewable energy credits) and all you’de be lucky to save after going through all the trouble of being locked into a lease for all those years is typically only $25.00 a month. And after more than 10 to 15 years of payment you would own absolutely nothing. You’re far more better off to buy a system using traditional financing and not only will you get all of the financial incentives mentioned above but you’ll also own a system that will put cash into your pocket every month for another 30 to 40 years after you’ve paid it off. Lease a solar system…..I don’t think so ! Buying one makes alot more sense.

  • Steve

    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?

  • Steve

    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?

  • Whitefox

    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.

  • Whitefox

    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.

  • Sarah Lozanova

    Unfortunately I don’t. California and the Phoenix metro area are the only locations that I know of that have such programs.

  • Kenny Shaw

    Leasing solar looks great! Do you know any company or organization in eastern Virginia offering similar deals?

  • Pingback: A Thin-Film Solar Panel Installation : CleanTechnica()

  • Taj

    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!

    • Solar City also told me we don’t have enough roof space for the common electricity, but four other companies (who, unlike Solar City, actually came to look at our site) say we have plenty of room. Only one of those can offer a lease, which I’m looking into. I understand the concerns of some homeowners who commented here, but for our condo complex we would save thousands a year, and we just don’t have the option to buy because the HOA has no extra money. For a condo complex, leasing may be the only option at the moment

  • Taj

    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!

  • Sarah Lozanova

    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.

  • 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?

  • 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?

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