SunPower Charges Solar Leasing Program With $42 Million
US manufacturer SunPower has secured $42 million that will be aimed at escalating its solar leasing program. The California-based company now has 20,000 American households signed up for solar leasing, a trend initially led by others that SunPower has jumped into.
This $42 financial investment comes from Hannon Armstrong Sustainable Infrastructure Capital, Inc. (NYSE: HASI) in the form of “non-recourse debt.” Non-recourse debt, according to Wikipedia, “is secured by a pledge of collateral, typically real property, but for which the borrower is not personally liable. If the borrower defaults, the lender/issuer can seize the collateral, but the lender’s recovery is limited to the collateral. Thus, non-recourse debt is typically limited to 50% or 60% loan-to-value ratios, so that the property itself provides ‘overcollateralization’ of the loan.”
The bottom line, however, is simply that SunPower sees solar leasing as a good continued business strategy.
“The SunPower Lease program offers our customers financing under highly competitive terms for their SunPower solar panels, the most efficient on the market today. When coupled with our unprecedented level of energy assurance, the SunPower Lease program delivers more value to the homeowner,” said SunPower CFO Chuck Boynton. “Among our portfolio of financing options, solar lease remains one of the more popular choices by consumers and our innovative partnership with Hannon Armstrong will allow us to further fund the program’s growth this year.”
California installed more solar power in 2013 than in the previous 30 years combined, and a lot of that was installed via solar leasing.
Read related stories:
What A Free Solar Site Evaluation Can Do For You
SunPower Launches Commercial Solar Panels With World Record Efficiency — X-Series
Solar Leasing vs $0-Down Solar Loan — Scenarios In 10 States
SunPower CEO & Chairman Talks About The Solar Leasing Boom (VIDEO)
Solar Leasing For Small Commercial Solar Projects
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Are solar leases and PPAs a Scam ? You decide.
First of all, the homeowner has to forfeit the opportunity to collect the 30% federal tax credit worth about $10,000 on a 6 kW solar system at the leasing company’s much higher pricing. The homeowner also gives up any cash rebate or other incentives.
A $0 down solar lease will typically cost the consumer up to 3 times more than the price to purchase a system. Don’t believe it? Well it’s simple math. Add up the 20 years worth of lease payment on a typical 4.7kW leased system and you’ll find that the system will cost you about $28,080. Purchase the same 4.7kW system and apply the 30% federal tax credit and that same system will cost you about $9,642.
So $28,080 to lease (rent) or $9,642 to own. So who’s really paying for the repairs, insurance and monitoring on the leased system? Well, I’ll give you a clue; it’s not the leasing company.
And good luck ever selling your home with a solar lease attached to it. What potential homebuyer will want to assume your lease payments on that used solar system, when they can buy a brand new solar system and keep all of the financial incentives for tens of thousands of dollars less than your remaining lease payments.
And if you need $0 down financing, a much smarter way to go is with a $0 down FHA solar loan with tax deductible interest. (A solar lease or PPA does not offer tax deductible interest). Or how about a $0 down, low interest LightStream loan that requires no collateral whatsoever.
Or how about one of those $0 down PACE financing programs with tax deductible interest, that are starting to sweep the nation, that allows the homeowner to make re-payments through their property tax bill.
All three of these forms of financing require no money out of pocket and you get to keep the 30% federal tax credit and any applicable cash rebate instead of giving them away to the leasing company. And the best part is that you’ll own your solar system for a much, much better return on investment.
Solar leases and PPAs are not very smart. Not very smart at all.