Solar Lease
Know what to Ask



The solar lease concept is similar to the well known car lease agreements. It is one of the methods to bridge the gap between the homeowner cash availability and the actual price of the residential solar power generator

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Solar Loans or Solar Lease?

You heard a lot about using solar electric panels that generate electricity, you have decided to further explore this avenue, you have started to look into the numbers. For a typical home, a typical production capacity of 3 to 4 k is required, producing 500 to 700 kW-Hours monthly. The price for this size system, including the DC to AC inverter and installation is around $20,000 and up to $30,000, in the same ball park figure as the typical family car price. The IRS allows for 30% energy tax credit , different states provide additional tax credits. In California, the incentives can amount to 45% of the price. Many people still find it difficult to finance the remaining balance with out of pocket money. They can choose to apply to solar loans or explore the solar lease alternative.

What do you need to know?

There is a similarity between the different lease agreements, however there are differences. Look into the following items in the lease company proposal:

  1. Usually the lease period is 15 years; find out what is the offered lease period you will be committed to.
  2. Usually you can extend the lease period by 5 years when the original period is over; find out what are the terms during the extended period
  3. Can you terminate the lease? What is the cost to terminate? Some contracts require that you pay for de-installing the system ($2,000 to $3,000, to be done by an authorized installer)
  4. Does the monthly fee cover also repair and maintenance? Do you need to insure the equipment to cover tear and wear and to be protected from the elements?
  5. Do you have the option to buy the system? when can you exercise the option and how much will you need to pay?
  6. Usually the monthly fee reflect the actual net monthly power consumption or it is a flat rate. In both models, the price formula is fixed, based on the electricity price you’d pay to your utility on the day you signed the contract. This is a tremendous advantage because you effectively buy an “insurance policy” against electricity price hikes
  7. Look for an upgrade clause; usually there is one
  8. Find out what are your options in case you sell your home to a 3rd party

What are your advantages?

You get a turnkey residential solar power system at zero or very low down payment. You enjoy a clean energy generator and an autonomous supply of electricity. You may win pay back money if and when non-polluting power generators will be rewarded, a very likely to happen legislation. Your home will be appraised higher with the solar power system installed.

What does the lease company get?

The Lease Company is a business enterprise with making a profit purpose. They get a license from you to use your roof to install the solar power panels, they sell the surplus production during daylight to the utility at feed in tariff, they buy the equipment at whole sale solar price and price it to you at retail prices. In essence, this enterprise becomes a virtual electrical utility.

Who are the players?

This is a short list; SolarCity is the most known enterprise. In Connecticut, CT Solar Lease is the leader. CitizenRE 919-863-6654 currently holds people on a waiting list until they have their own production facility.

Solar lease is one more element to consider in the cost of solar energy to the homeowner equation

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