We are looking to put solar panels on our roof to power our home in Mesa, AZ. We are torn between purchasing a smaller system outright that may cover 25% or so of our usage and own it (and thus get all rebates & incentives directly), or getting a larger system that could offset all of our usage but which requires signing a lease with Solar City with $ 5k down, $ 50/month, and $ 12k final out of pocket price after 20 years (but they apply for and receives all rebates/incentives and own the system for 20 years). Solar City has a great contract with a very low interest rate, extremely competitive prices on the system components, no annual increases, no lien on the home, and they give you the system to own at the end. They also monitor the system and warranty it for 20 years against everything (weather, neighbors kids, electrical failure, etc.), as well as insure the property against damage caused by the panels/install. They answered every question (we asked hundreds!) right, nothing hidden and it’s a very reasonable deal for the leasee. However, we hear that it is more cost effective and there is a better ROI if we buy a system outright. We are wondering beyond the rebates available, would it be better to buy a small system and add to the system size over the years to own the system (and thus be able to easily sell the home vs. having to get Solar City’s permission if it is sold in the next 20 years)? Is the ROI really that much different? What annual tax benefits can be had if we own the system? Any thoughts, suggestions, etc. are greatly appreciated!!!
More Pages:
- Solar Turbines: Is Residential Solar Power Technology Mature Enough To Purchase? (5/5/2011)
- Do Solar Energy Rebates Come from Power Companies because they buy the power locally & Cheaper and it’s Clean?
- Solar Power: Did You Know That Solar PV Panels Are More Efficient In Colder Temperatures? (11/3/2011)
- Homemade Solar Panel Question – What Ebook to buy?
- Solar Power: Are There Rebates/incentives For Solar/wind Power In The Dallas/Fort Worth Area? (11/11/2011)
{ 4 comments… read them below or add one }
From what you describe, the leasing sounds like a decent option. Besides solar isn’t overly efficient yet and any system you buy will be obsolete by the time you break even…and/or will need to be replaced.
For $ 5k and $ 50/month I’d get one.
Straight and simple:
It is more cost efficient to own outright, if ……….there is no damage, vandalism, or unexpected occurances.
20 years is a long time.
Most systems are paid back over a 15 to 20 year term.
It it really worth the worry of all that for 20 years?
The real question is what is important to you, every dollar that you can save, or peace of mind.
Good Luck
I would definitely own it. Have you had a lawyer look at the documents? There are sometimes things left unmentioned or minimized that could be an issue years down the road.
I own a solar installation company on the East Coast and we like to see clients own the systems themselves. Regarding your tax question about owning it yourself, ask Solarcity about that. If they do not provide the info, go to another installer and ask the same questions.
Here is our website if you want to check out more about what our customers are saying and experiencing. http://www.paradisesolarenergy.com
Did Solar City have a performance warranty, that is, did they guarantee a certain number of kWh would be generated per year? Without that, your ROI will be based on a guess that could change in reality. $ 50/month may sound great on paper, but you might still get a bill from the electric company as well.
In general, it seems that for a lease, someone has to come up with the money up front. That’s basically a loan, and the lender must make a profit, so must charge interest. That tells me that for the same size system, it should generally be cheaper to pay cash. But as you say, the larger system is financially out of reach for you with cash. If it were me, I would count that as a sign that my finances are not strong enough, and would build up my savings until I could pay cash. But I’m a risk-averse person.