Apr
02

Buy Rented Energy From Your Own Roof?

Peter Herschberger | Posted on 4/2/2010 12:00 AM | Comments on 0 comments

Think Twice About that Solar Lease…

We’re seeing more and more customers putting leased solar panels on their homes these days, and entering into arrangements with large companies who use the space on houses’ roofs to generate power and sell it back to the homeowner.

Though Infinite Sun Energy will likely begin offering lease programs later this year, we will continue to highly recommend retaining ownership of your system at all times. Here are reasons why, if possible, you should stubbornly stick to ownership of your system:

Savings. By owning your system, you keep all the savings from your investment instead of handing about half of it to a financial institution. It may be a bit more pain now, but it will be long forgotten during the 25-year+ service life of the system.
Home value. A leased solar system doesn't enhance home value since it is always the property of the leasing company. It does not translate to a higher selling price. Anyone you may want to sell the home to in the future will need to like the system and agree with the terms they inherit. In this case, leased solar may – or may not - be an advantage in selling your home, because:
The available space on the roof of your home is becoming more and more valuable every time the power company raises rates. In five years, solar lease homeowners will likely want to own their energy production system, but may be unable to economically regain the use their own roof. Home buyers will prefer to buy a home where the solar system is actually included in the purchase price because they’ll get full electric bill savings and they can deduct the interest on the home mortgage, which will include the solar system.
Independence. Solar energy is one of the last great opportunities for average people to assert their freedom from huge companies. What good is extricating one's self from the electric company only to become intertwined with a leasing company?
Technological currency. Leasing companies often put older, less powerful solar panels on lease clients' roofs to clear out warehouses full of unsold inventory. This is true even of well-known names in the business. If you must lease, make sure you know what they are offering and that you are getting current technology.
Personal transportation. You may not be thinking it now, but within five years, you may well be motivated to buy an electric vehicle. If you do, it will represent a significant increase in the amount of energy you use, and that will push you into higher rate tiers with PG&E. Keeping control of your roof allows you to control the price of your transportation to a greater degree in the future.

Solutions to avoid leasing and get into ownership:

A Home Improvement loan that you pay in <5 years. At least the bulk of the savings over 25 years will fall right in your pocket.
A Home Equity loan. Once again, make accelerated payments and get the additional benefit of deducting the interest from your income tax.
Phase your installation over a period of 1 – 3 or more years. Let me say that again…

PHASE YOUR SOLAR INSTALLATION IN AFFORDABLE SEGMENTS OVER 1 – 3 OR MORE YEARS

A solar energy system is a long-term investment in a highly durable asset. Why then, look at it as an “all or nothing” proposition? While phasing an installation over time is a bit more expensive than purchasing a system all at once, the additional expense is nothing like interest or leasing fees. Here are some of the benefits of phasing:

You significantly reduce your cash barrier to entry to solar. A $12,000 initial investment is obviously much easier to handle than a $30,000 one.
You start saving right away. And if you are paying for significant amounts of electricity in the top two tiers of the rate card, you offset those with your first phase. This step actually helps you save for the next portion of the project.
There’s no long term commitment to spend. If you find your self needing to hold off to finish saving for a subsequent phase, you’re always in control of your own destiny.
You stay independent and take control of your energy future by taking control of your energy price.

There are technological approaches that can help you phase a project. Buying an oversized inverter and adding a string of panels in a <12 month time frame can be very effective. Micro-inverters give the homeowner almost unlimited freedom to choose system size and subsequent phase sizes.

Here's how a phased project might look: