Francisco CastroJune 4, 20191660
Five years ago, Karen Coon signed a solar lease to put panels on her Lacey, New Jersey home. The offer was good: no money to get solar energy, with big savings on her utility bills.
But, as it often happens, Coon didn’t read her entire solar lease contract, especially the part where she agreed to an increase rate hike of 2.9% every year for 20 years.
With compounding, a $200-a-month bill today could top $340 a month at the end of the two decades — a 72% increase over the life of the contract, according to the Asbury Park Press Newspaper.
And not only that, she didn’t realize she still had to supplement the energy her panels didn’t generate at night with power from the electric company. In total, there were some months when she was paying over $300 for the solar lease and the electricity she bought from the utility.
Coon, 72, now realizes she made a mistake signing up a solar lease.
The problems with leases
Experts all around recommend against leasing a solar energy system. The reasons are myriad.
Those who lease can’t take advantage of rebates, incentives and the 30% solar investment tax credit (ITC) offered through the end of 2019 by the federal government. The ITC will go down to 26% in 2020; 22% in 2021 and will then disappear for residential solar customers. Commercial credit will go down to a permanent 10% at that point.
And while you can achieve substantial savings in your electric bill, you still have to make a monthly payment for the duration of the lease contract. Customers who purchase a domestic solar power system not only own their solar arrays for the lifespan of the system, but often recuperate their investment in 6-8 years.
Sure, there are thousands of solar customers across the country for whom solar leases work. But as in the case described above, the little details - such as escalating interest - can play havoc with electricity savings.
And if there’s a dispute, solar contracts may come with an ironclad, you-can't-sue-us clause that will force you to take any dispute to an arbitrator, usually chosen by the company.
Not only that, but solar lease customers can’t take advantage of net metering, where the utility company pays you for the excess power your home solar energy system generates and you don’t use. That can amount to substantial credit for the power you do need to buy from the utility when your panels are not putting out power, such as during the nighttime.
And the promise of free installation and no upfront costs, coupled with free maintenance for the duration of lease contract is not really attractive nowadays when the cost of solar panels and equipment is at an all-time low. And this equipment is fairly durable and reliable, requiring little or no maintenance for years. With proper cleaning and monitoring, the only thing you will have to replace will be your inverter, but that’s only if it’s the string kind, which has a warranty of about 10-15 years. If you choose microinverters, you’re covered for 25 years.
And lastly, if you decide to sell your house and you have a solar lease, you may encounter a problem having a potential buyer take on the lease. Sometimes, those with a solar lease will have to buy the system before they can sell their home, but to do so, they might have to pay thousands of dollars.
What to do?
If you believe a solar lease is the best way to go, here are some recommendations to follow:
Evaluate your situation
Do you know your average monthly energy needs? This is important because it will allow you to match a residential solar power system that supplies, if not all, most of the electricity you require.
To find the costs for solar panels for your home, all you have to do is take a few seconds to access the Hahasmart price checker. Simply provide your address and monthly electric costs and you will get an estimated price of the panels and inverter - the most expensive parts of a solar energy system. They’ll also provide you with an estimate for the cost of installation based on thousands of completed solar projects in your area. All you have to do is provide your address and your average monthly utility bill.
They’ll even provide you with an estimated buyback period, the point where the electricity savings cover the purchase of your residential solar panels and your system becomes free.
In addition, they’ll connect you with their installer network to get your residence equipped with solar power as possible.
Do some research
If someone approaches you with a solar lease contract that’s too good to be true, really look at the contract, and read it thoroughly, asking as many questions as possible. Also, look up online reviews to see what the experiences are for other customers.
Ask if rates will change
Often, solar lease contracts come with escalating costs to account for the fact that utility electric rates typically increase. Ask for a detailed explanation of these rates hikes.
If everything checks out and you feel comfortable with the contract, sign it. Otherwise look for other alternatives to finance your home solar energy system that will allow you to own it and still save money on your electric bill.
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