Solar Leasing: Why It’s a Bright Idea
This post is provided by Chris Long, an associate with Home Depot who covers home electrical topics for the HomeDepot.com.
In this day and age of heightened awareness about global warming and how our past actions have impacted the environment in ways we never imagined, it seems crazy to have tools that will helps us correct ourselves but decline to use them.
Of course, fans of solar power need no convincing when it comes to the concept of working with nature rather than against it. But for those who are unsure – or even opposed to it, based solely upon the potentially prohibitive costs associated with establishing a home system for harnessing the power of solar – there’s a lease option. Depending on the provider you go with, at the end of your contract term, you might have the option to purchase the system at a fair market value or possibly be given the system outright. Again though, it depends on the provider.
Already permissible in 15 states and the District of Columbia, solar leasing is one way that the power of the sun can be yours even if you are not financially equipped to invest in an entire solar setup.
The way it works is really easy to understand: In essence, private companies purchase the solar panels, lease them to you, and you pay them instead of your utility company.
However, many states are resistant to this process because legislators argue that the third party provides a utility which is therefore subject to regulation… their regulation. Unfortunately, this kind of thinking means that solar leasing does not exist in over two-thirds of the nation.
So who’s right? Like in every debate, you should familiarize yourself with the merits and shortcomings of both sides before making a decision and to help with that, here’s a bit more on the arguments from different angles.
We, the People
On the one hand, private citizens argue their right to engage in a free market economy in any way they choose – that’s what free means, right? They point to benefits such as:
- Affordable Upfront Costs: Since many folks lack the upfront funds to outfit their entire property with solar cells, having an option that merely requires monthly payments is financially feasible.
- Lower Utility Bills: Citizens can start saving right away on utility bills with solar power.
- Greener Impact on the Planet: Not only do you get to reduce your wasteful energy consumption immediately, but you also pay it forward by encouraging others to do the same as a result of your example.
- Flexibility: Leasing the solar equipment means you have the ability to grow with the technology – pay for what you use and “upgrade” down the road if you so choose. Right now, upgrades are typically allowed at the end of the lease, which averages 20 years.
Promote the General Welfare?
Of course, the benefits to the individual abound but what about the general public and consumers as a whole: is solar leasing still a great option when you consider the big picture? Well, consider these two points:
- Job Creation: Many proponents argue solar leasing is a good thing across the board because it creates jobs. In a down economy or one experiencing high levels of unemployment, we can’t afford to turn away opportunities that result in job creation.
- Stronger as a Unit: Any time we can strengthen the utility grid with renewable energy and reduce our reliance on non-sustainable energy sources, that’s a good thing!
Governmental Grab Bag
At the same time, one argument in opposition to solar leasing is that many governmental incentives specifically created to encourage renewable energy investments by individuals are now placed back into the pockets of the corporations they were designed to circumvent.
Some of the biggest carrots dangled by the various governmental bodies include:
- A 30% federal tax credit
- State and utility-derived cash incentives
- Renewable Energy Credits (RECs) that companies can purchase to offset carbon emissions
A popular assumption is that you might be out of luck if you lease your system and then decide to sell your home. It’s actually quite the opposite. LBNL found that homes with solar sold faster and for more than their counterparts without panels. (Ed. Note: We at 1BOG even made a video about this.) Systems are actually very easy to transfer and if you do end up paying down the remaining payments, you can add that to the cost of the house.
But at the end of the day, there are ways to make a solar lease work for you – and work for the good of everyone else in the process – as long as you’re fully informed of all lease terms before getting involved.
About Chris Long
Since 2000, Chris Long has been a store associate at a Home Depot in the Chicago suburbs. Chris writes on electrical topics for the home, including solar panels and LED bulbs, for the Home Depot website, as well as on other home improvement areas of interest to homeowners.