A relatively new addition to the world of solar power systems is the concept of solar leases. A solar lease can provide a path toward solar energy integration for home and small business owners that might otherwise be unable to make such an investment. In this article we’ll take a look at what is involved in a solar lease, how some of these programs work and discuss one solar energy company’s recent adoption of solar leases and how it integrate these programs into its business model.
In the last year or so, solar lease programs have gained in popularity. According to the National Renewable Energy Laboratory, this may be due to the fact that on January 1, 2009, a $2,000 cap that was placed on the federally sponsored residential investment tax credit (ITC) was lifted. With this cap gone, more funds are available to be leveraged for residential solar installations. In addition, many states have put together some pretty compelling renewable energy tax credits that can be tacked on top of federal credits. A state by state listing of renewable energy tax credits, including solar, are available at sites like the Database of State Incentives for Renewables and Efficiency (DSIRE).
Even with government assistance, however, the up-front costs for solar installations still put the technology out of reach for many. Solar leases make an attractive option because they wrap the up-front costs into a long term lease agreement and are paid over time. With many of these lease programs, the solar system can be purchased at fair market value once the contract is completed.
We spoke with Rusty Pittman, head of marketing at SolarWorld Americas, about the company’s lease program and how it manages it. He told us that SolarWorld launched its lease program at the beginning of this year and that, through the program, customers use the electricity that is generated from the leased system. Using solar energy reduces the use of utility provided power from the grid and, thus, reduces energy bills. The idea is that the savings that the customers experience in their electricity bills exceeds the lease payment. In this way, the customer gets to enjoy a decrease in monthly expenses whilst also paying toward the installed solar system.
Solar leases are not necessarily the best option for everyone, however. For companies like SolarWorld that work with third party investors to finance the solar lease programs it administrates, an applicant must meet certain criteria. A credit check is required and other qualifying factors are involved as well.