Thomas Gottberg, an experienced real estate broker, knows all too well that ever-rising operating costs can eat up an investment. However, solar energy can be a good way to defray these recurring expenses, especially if your home is located outside of Palm Springs, California, as is Gottberg’s.
There are a few different routes to “going solar.” For those with ample cash on hand, purchasing a solar system is a consideration. Otherwise, a solar lease is the only feasible option. In fact, today more homeowners choose to lease than buy solar systems, a fact that hasn’t gone unnoticed to investors in solar leasing programs.
The benefits of a solar lease include the option of a zero down payment and all maintenance of the solar system covered by the lease. It was this second benefit that prompted Gottberg to consider leasing solar panels, even though he had the cash available to purchase the panels outright.
“I had always been interested in solar — I just needed an incentive to make the investment,” explains Gottberg.
In his case, government solar rebates were the incentive. It would have cost $17,000 to purchase and install a 3.8 Killowatt (Kw) solar system on Gottberg’s residence. After the rebates of $8,200, his cost would have been reduced to $8,800.
Most solar panel companies include a warranty on the solar panels. However, the warranty on inverters (the device that converts solar output into useable electricity) often are limited to ten years, and cost thousands of dollars to replace. Further, if a homeowner purchases a solar system outright and the solar installer goes out of business, the homeowner is out of luck if the installation was defective. However, with a solar lease the leasing company will simply send out a different installer.
Gottberg chose a pre-paid lease, purchased through SunPower. The pre-paid lease cost the same amount as purchasing the system outright, but covered all of the solar panels as well as the inverter.
Two years ago, before installing solar panels, his monthly electric bills averaged about $160 a month. Today, he is paying zero dollars for electricity. In the winter months his panels gather more energy than he needs to power his home and the extra energy goes back into the grid, giving him credits that he can use later in the year. Thus, in the summer months when he needs more energy than his panels can produce each day, his credits cover those extra costs. This has worked out to a bill of zero dollars each month since he’s had the system in place.
Editor’s note — Actual savings from a solar lease depend on the size and output of the solar panel system. The first step for homeowners is to get an estimate — usually free from a solar leasing company — of the solar panel system suitable for their home, and a general idea of the fixed-rate for solar power. The next step is for the homeowner to compare their current electric bill with the rate offered under a solar lease.
When asked if there are any drawbacks to his prepaid lease, Gottberg has little to complain about. Sure, there are those who worry about transferring the lease once a homeowner with solar decides to sell. But Gottberg simply doesn’t foresee a scenario where a homebuyer would not want the lease, as it is prepaid (costs the homebuyer nothing) and means the homebuyer will pay nothing for electricity. When pressed, he says if the homebuyer really doesn’t want it then they can always negotiate the purchase price.
One potential fault to signing a solar lease is that if your roof needs repair during the lease, the company will not pay to remove and reinstall the panels, thus the homeowner will absorb the cost. However, with careful planning a homeowner can usually avoid this situation by making sure their roof is in good shape before the solar installation.
Further, the longer a homeowner owns their home, the greater the pay-off of purchasing a pre-paid solar lease, or buying solar panels outright. If you’re a homeowner who plans on moving in the near future, you’re better off putting down solar roots once you’re in a long-term home. In the meantime, you can make smaller adjustments in your home’s energy use and take the extra time to do your due diligence in researching and identifying the right solar system for your situation.
Leftists always claim that the oil companies are subsidized by the tax payers, yet those companies get the same tax incentives as any other corporation – no difference. Real subsidies go to the “greenie” sources of power forced from consumers in the form of surcharges. “Green” sources of power could not exist without forced contributions from the petro industry.
Solar is an extremely bad investment.
Including the subsidy it take 20 years of energy savings to pay for the panels, before getting any return on the capital!
The dirty little secret of the solar industry is the life of a solar panel is 20 years! So it stops working just when it is paid for.
It solar were a such good investment then why does the government have to provide a whopping 50% subsidy to entice people to buy them???
The cost of the subsidy is paid by we taxpayers. I don’t know about you, but I sure don’t want my hard earned tax dollars to be given away to another taxpayer to entice him to buy solar panels.
Why not properly take the taxpayer capital subsidy into account when calculating whether solar provides a return on the capital invested???? After all, the subsidy is NOT FREE MONEY!!! but is capital that can, and should, be used for something far more beneficial to the country.
Turbo…I agree that subsidies are not the way to go. BUT as long as they are available there is no reason not to take advantage of them. That is just good business. Do not forget that OUR tax dollars provide the oil companies billions in subsidies every year and they are the most profitable companies on the planet. With regard to your comment about it takes 20 years to pay for the panels. Let me say that your math is just wrong. Let me do the math for you. If I got no subsidies and paid $17,000 for my solar system it would take me right at 103 months or just under 9 years to pay for my solar system. This is using my average monthly electric bill of $165. This does not take into account any rate increases. If I took the estimated rate increases over the next 8 years I would pay for my system in about 8 years (with no subsidies). This means I would get 12 years of free electricity after paying for my system, assuming the panels only last 20 years. That is a savings of over $22,000 over twenty years. Now how can you say that solar is a bad investment if you do the math.
I’ve read many studies, and articles such as this one, on solar leases. No one states how much they pay in monthly lease payments. This is one of the considerations of solar leases vs. average current monthly electric bill, with most solar leases running 20 years. Also, no one mentions the non-curable obsolescence factor over the 20 years.