Tag Archives: solar equipment leasing

The Pros and Cons of Solar Leases

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Welcome to the solar energy channel where you will get an honest inside look at all things solar. So in this video, we’re going to dive into the pros and cons of solar leases.  

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.

Source : Youtube

Solar Energy Leasing Explained

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Solar Leases & PPAs – Solar leases and Power Purchase Agreements – also known as PPAs – allow you to take advantage of the financial and environmental benefits of solar without owning your solar panel system.

Both options are similar to renting. With a solar lease, you pay a monthly fee for the system and get to use all the electricity the solar panels produce – for free. With a PPA you agree to purchase the electricity the system generates at prices that are lower than what you would pay your utility.

Most leases and PPAs have $0 down options so you won’t pay anything upfront. Your monthly payments for a lease or PPA is usually less than your current electric bill so you begin saving right away. A solar lease or PPA will help you to save 10%-50% over your utility’s electricity bills, without making any upfront investment.

And, over time, as electricity prices continue to rise, your savings will continue to grow. Although solar panel systems require little to no maintenance, if something were to happen, the lease or PPA company would be responsible for any repairs since it is the owner of the system.

Securing a lease takes less time and effort than securing a loan. Generally, you sign a 20 year contract with the leasing company and they will install the panels at your home. You will need to have a credit score of more than 700 to qualify for a solar lease or PPA.

Today, these options are only available in a limited number of states. Where they are not available, you always have the option to get a solar loan. Since the leasing company owns the solar panel system, many of its financial benefits – things like rebates, tax credits and incentives – would go to them.

So if you are looking to maximize your investment in solar, lease and PPAs aren’t the best choice. They are a great option though if you’re looking for a simple solution – one that provides you with the environmental benefits without responsibility for maintenance.

They are also a good option if your tax bill is less than the tax credit you would receive. If you decide to sell your home before the end of the contract period, you can do one of two things. Option 1: You can work with the new buyer and the lease or PPA company to have him or her assume the remainder of the contract.

In this instance, the company would verify the buyer’s credit worthiness, but this is generally not an issue since they already needed to qualify for the mortgage used to purchase the home. Option 2: you can buy the system from the lease company at fair market value and then include it in the price of your home at the time of sale.

Now that you understand your options, you’ll need to choose the one that’s best for you.