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.