Solar Panel Leases: What You Should Know

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).

image via SolarWorld

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.

  • u00a0It would really be great to have house solar panels. It has many benefits and advantages. It could help the owner lessen the bills and save more money. It could make your meter run backwards. Let go green!nnGreat post.

  • Anonymous

    u00a0Solar panels can really give advantages and benefits. It will lessen your expenses and your bills. In that way, you can save money. It also uses green energy, so it is helpful for our mother earth. But installing or buying them would cost you. You could build your own solar panel so it would cost you less.nnGreat post.

  • Wreckjaxon

    The only way for a customer to save is to buy the system outright. If you want to lease, be sure to subtract your new leasing bill from your energy savings…this is your true savings. And, in the end, you don’t own the system. You’ll still have to put out a few thousand dollars to buy it, and the panels will be at the end of their working life.

  • Ray Boggs

    There’s no such thing as a $0 down solar lease or PPA. It’s just a marketing myth that was created by the leasing and PPA companies. In order to participate in their supposed $0 down solar lease or PPA, you have to hand over your 30% federal tax credit worth about $10,000.00 on a typical 6kW solar system at the lease and PPA company’s much higher pricing. Since when is $10,000.00 equal to zero down? And good luck ever selling your home with a solar lease or PPA attached to it. Search the Internet and you’ll find a lot of people complaining about the difficulty they’re experiencing when attempting to sell their homes after signing a solar lease contract. Instead of a solar lease or PPA, you’re far better off with a $0 down solar loan instead of a lease that allows you to keep the 30% federal tax credit and any cash rebate and own your solar system for a much better return on investment.