At first glance, going solar can seem like a no-brainer, especially if you live in a solar-friendly state like California or Arizona. Residential solar panels not only drastically reduce your carbon footprint, they can also trim your electricity bill to a fraction of its pre-solar total. Who wouldn't consider making the leap? Well, for starters, people who don't have an extra $30,000 lying around to make the initial investment--the average cost of a residential solar system. But solar leasing, a new way to finance those Earth-friendly panels, is making going green a whole lot more affordable.
How does a solar lease work? After establishing that your home is solar compatible, a full-service provider installs and maintains the panels on your roof. In exchange, the homeowner pays a fixed monthly rate for the next 10 to 20 years. The project is financed in part by significant tax credits given to the provider's investors.
Right now only a few companies, such as SolarCity, Sungevity, and SunRun, provide this service in a handful of states. But with Pacific Gas & Electric's recent announcement that they will launch a $100 million tax equity fund to finance solar leases for SunRun, leases are on their way to becoming more mainstream.
Lessees will not save as much money as panel owners, who eventually recoup their initial investment, but because a locked-in monthly rate largely insulates homeowners from fluctuating energy prices, a lease is still almost guaranteed to be a financial boon. In its first year, a solar lease is estimated to cut an energy bill by about 15 percent (high energy users often do much better); in subsequent years the savings will become even greater. Should a homeowner move before the lease expires, they can transfer it to the new owner. And at the end of the lease, homeowners have the option to renew, remove, or purchase the system at market value.
In 1979 President Jimmy Carter installed solar panels on the roof of the White House, proclaiming, "a generation from now, this solar heater can either be a curiosity, a museum piece, an example of the road not taken--or it can be a small part of one of the greatest adventures ever undertaken by the American People." Seven years later the panels were quietly removed--costs were cited--and were never replaced. Maybe with a solar lease, the White House could afford them once again. The neighbors would be sure to follow.