The vast majority of new solar power customers in California are going solar in a way that costs them more money in the long run.
About 70 percent of new solar customers in California are getting panels with leases or power purchase agreements, which has them paying for the energy their panels produce rather than regular monthly sums, according to a National Renewable Energy Laboratory analysis released earlier this year.
There are two big reasons for that. One is obvious. Cost-wise, going solar isn’t much different from any big purchase – people who buy solar panels come away with a better deal over the long haul, but leasing is attractive to people with less to spend up front and who don’t want to make the commitment.
“Consumers are looking for simple and that’s why I think leases have been very popular,” said Vikram Aggarwal, CEO of startup EnergySage, an online solar cost-comparison marketplace.
But money and convenience isn’t the sole driver of the solar leasing phenomenon – there’s also a powerful marketing push behind it.
The nation’s biggest solar companies such as SolarCity, SunEdison and the Costco-affiliated Sunrun, are aggressively pushing that option. Their ads are alluring, usually doubling down on the message that it’s possible to put panels on your roof with as little as $0 upfront and to reap immediate energy savings.
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I worked for one of the companies mentioned in this article and had the opportunity to review cost savings analyses with numerous customers. Many people saved money with solar leases, some people didn't. Thankfully the company I worked for adopted a policy that mad sure folks were saving. Will homeowners save more if they buy their own systems? Of course. However, that doesn't mean going with a power purchase agreement or lease won't save you money. These products are for people who CAN'T buy their panels. So if the choice is between buying your panels or leasing them, you'll probably want to buy them. But if the choice is between continuing to buy expensive high tier electricity or offsetting that cost with a solar lease, go for the solar lease. Shop carefully and read the fine print. Some of these agreements go for 20 years and if you move and the new homeowner doesn't want to take on your lease, you can get seriously screwed. Work with companies that have a reputation in the community rather than who has the lowest prices. Otherwise you could end up with a leaky roof and a sloppy installation. Make sure you choose someone with a savings guarantee, not JUST a production guarantee. Don't listen to your sales rep, read the agreement. There's a lot of Sales reps giving out a lot of misleading information. Some of it's ignorance, it's an emerging industry and there's a jobs opening up and people filling them who don't know what they're talking about. But some of it is malignant --- there are sales reps out there who are just out and out criminals who will tell you anything you want to believe to get you to sign on the dotted line. At the end of the day, if you're interested in going solar and you can afford it (or get a loan that's more cost effective than a solar lease) just pay for it. If you can't afford it but still want to go solar and lower your carbon footprint, solar leases or PPAs might be a good option for you. Just read your contract and only go with a company that has a reputation or some good references.
-Former Solar Professional, Now Nonprofit Warrior
Another significant issue not discussed are high power users whom typically have pools and other high draw equipment that pushes them into the higher tier power rates. Having solar panels is much more cost effective and can reduce the payback period significantly if they are able to offset the higher elect rates they are paying even if they don't provide 100% of the power . This is called tier shaving in the industry and is one of the plans pushed by contractors to sell systems.
Obviously everyone has to do the math and determine what works for them. My investment of $12,400 in 2010 is on track to pay off in about eight years, so something close to the Graebers' expectations. The leasing concept seems to me to be very questionable. If you look at solar panels as having a cost similar to a car, most people who take out a car loan pay it off in five years or less. Home equity loan rates are available at under 5% from some sources. It would seem to me that for a variety of reasons noted in this article and elsewhere you should probably avoid the leasing option if at all possible.
It would be fair to include the costs of cleaning and maintainence and the risk of investing capital in a lemon. Are there figures for those numbers?
@Carrie Good points. I have been told that cleaning is wise, but basically I hose them off once or twice a year. I'm not even sure if that is really necessary and I have not calculated a benefit (or lack thereof) from doing so. Clearly there is a risk of defective materials, but that should be covered by a good warranty. In my case the warranty is 10 years parts and labor, The array should have paid for itself two years prior. It was made clear to me that one item not covered in the warranty is the inverter, which lasts an estimated eight years or so and costs perhaps $1,000 to replace. Bottom line, there are undoubtedly risks associated with owning, but the cost and other problems related to leasing sound to me to be an unreasonable trade-off for avoiding those risks.
@Chris Brewster @Carrie Cleaning isn't necessary unless there's a real dense buildup on the panels. Just hose them off every once and a while like Chris said. You'll definitely have to replace your inverter. As for the panels themselves, having a solar lease doesn't actually guarantee they'll repair a faulty panel if the overall system is doing fine. For instance, let's say your system is guaranteed to produce 1,000 kwh of electricity a month. Midway through the year, a panel stops working but the system is still producing 1,000 kwh. Guess what, they won't fix the faulty panel.