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Solar Leasing Becomes Increasingly Popular Financing Option

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While the price of installing photovoltaic panels and solar water heating systems has fallen over the past three years, the upfront cost for any solar power installation can cause a bit of sticker shock. As a result, leasing programs have grown in popularity, with homeowners and businesses seeing the idea as a way to make the projects more manageable financially.

According to the California Solar Initiative, leases in the state have gone from 6 percent of all new installations in 2008 to about 60 percent as of this April, as reported in a PV-Tech.org article.

“Recently, a lease financing mechanism has been one of the most powerful drivers of solar power deployment in the US,” the article stated.

Solar Leasing Becomes Increasingly Popular Financing Option

How It Works
A solar leasing plan works much in the same way a car lease would. Instead of spending up to $40,000 on buying new solar panels, the business or homeowner contracts with a leasing company to pay for the system over time. Leases can have either a fixed or an adjustable rate and can last for up to 20 years, according to Mother Nature Network.

Leased photovoltaic equipment provides the same cost savings on electricity bills, and an installation paid for by a lease can still qualify for federal tax credits, MNN reported. While tax incentives may expire, a solar lease can be a stable long-term option for financing a new installation.

“Solar leasing not only removed the issue of hefty upfront costs, which could still climb above $20,000 even with incentives, but it also made residential solar simple,” Chip Gaul wrote in a March article for The Energy Collective. “Just review the terms of a contract which supplies green electricity to your home and pay less than you would have if you kept paying for dirty electricity. Boom. Done.”

Benefits of Leasing
The primary benefit of leasing is that it can reduce the heftiest costs of solar installations, which are the upfront fees. The National Renewable Energy Laboratory reported in April that because of leasing programs, the average annual income of homeowners with a California solar installation decreased by $50,000. If the lease agreement-induced price reduction was applied nationwide, an estimated 13 million additional Americans could afford photovoltaic equipment.

“Solar on our home was something we’ve wanted but thought we’d never be able to afford because of the upfront costs — even with the incentives,” Heather Lammers, a Colorado homeowner, said to NREL. “When we first heard about solar leasing, we jumped at the opportunity. It has made something we thought to be unreachable a reality.”

Residential Solar Lease vs Purchase

A solar lease is the best way to offset rising electricity costs!
Contact Solar Joey 24/7 about getting setup and solar lease financing.
Feel free to get started today with a solar energy quote.

Today we have seen a dramatic shift in how homeowners are going solar in California. In the past the only way to go solar was to make a large up-front capital investment. Typical system size is 5kW and in the past could range anywhere from $30,000-$50,000. Today, in California we are seeing more third party owned systems then the traditional purchase options. The reason this is happening is because companies like American Solar Direct who are offering a low up front cost fixed rate lease solution to going solar. With minimal upfront capital required you can get the same financial benefits as a purchase. With a lease option you also get the security of not having to invest any additional capital into the system down the road and the flexibility to move as you chose. Fixed rate energy is the future here in the USA. Below are some calculations of the opportunity of the the capital over a 20 year time span for a 3kW system. This is what is possible to do if you invest your money in the markets or other investment vehicles.

Return on the investment of $13,960 over 20 years.

  • At 4% the amount will grow to: $29,411.61
  • At 6% the amount will grow to: $42,237.37
  • At 8% the amount will grow to: $59,131.50

As the economy continues to recover the opportunity to leverage capital is getting better and better. Below you will find some stats and charts to validate this trend.

As we continue to approach grid parity across the country we will see this trend continue to grow. Most homeowners can go solar today for about what they are paying currently to their local utility. If you would like some additional info on solar leasing or would like a professional quote then get started with our solar quote creator . We will be in touch within 24 hours.