I’m Charles. And I’m Warren. So Warren help us understand what are solar leases. Sure, so solar leases take on a variety of different forms.
Sometimes they’re called power purchase agreements and sometimes they’re leases but either way structured slightly differently but they are where another company or entity owns the solar system and you basically rent or you pay for the electricity that’s produced from those systems.
So one of the pros of that is then that I don’t have to lay out the cash to buy the solar array. – Correct. The great thing about solar leases is that you don’t have to come up with an upfront investment.
Somebody else is going to pay for the solar on your roof. And another approach to that is that they’re also responsible for the maintenance and the insurance of that solar array, while you should still have insurance on your property to cover you, the company who owns or installs that a solar system for you is going to maintain it and insure it as well.
Yep, so there certainly are some cons though, to giving up that right of ownership. And one of those is you do not get the incentives. Yes, so over the long-term, you’re better off owning the system from a financial perspective.
However, if you’re not in a situation to invest or to buy solar, you might be able to save money from the get-go. One of the great things about leases is that many of them offer you an introductory rate that is lower than what you’re currently paying for electricity.
Yeah the reality of that is if you look as a industry standard on the lease, we are seeing 3 to 4% inflation rates on that lease rate over the life of the lease, which may be 10, 15 and 20 years. – And that’s the true trap with leases is that you’ve got to look for, is what is that escalator? You might be starting off with the slightly lower introductory rate, but it’s going to increase at 3 or 4% a year.
And then in five or 10 years from now, you might be paying more for your solar than you would have had you stayed with your utility company. Yep, so the thing again you want to look for is what is that inflation rate per kilowatt hour year over year? Because you do not want to be spending more in 10, 15, 20 years than you would need to, if you were purchasing your power from the utility.
Absolutely and there’s another very important point that you need to be aware of with solar leases is that if you want to sell your home or your property, you need to find a buyer that’s willing to assume that lease.
And so realtors might find that to be a burden or a liability on the sale because you got to find a very specific buyer for that property. And the reality is if you have a lease and you want to move, you’re not going to take that solar array with you and keep paying your lease payment and put it on the new property.
The leasing company is not going to want to pay, to remove and reinstall it. Absolutely, and it’s usually cost prohibitive and they won’t let you get out of those contracts. But if you’d like to learn more about the real estate side of things, we do have additional videos and blogs on that.
So in summary, if you’re looking to save the most amount of money over time, buying your own solar project is going to be the best way to go. However, if you do not have the money to make that purchase, a solar lease could be a good option for you.
You do want to, however, make sure that you’re aware of those pitfalls that we discussed in this video. – Thanks for watching. If you enjoy this information, be sure to like this video and subscribe to our channel for future releases.