Solar Energy Leasing May Have Hidden Costs
There is little debate that utilizing renewable energy is a beneficial, conscientious and wise choice to make for homeowners. Not only does it help reduce your carbon footprint and make you a better steward of resources, but it also has significant financial benefits and incentives.
While many understand the benefits of solar, there is a solar debate brewing in the Legislature now. The debate is this: Is it better to buy solar or lease solar?
As a small, locally owned business, we made the decision many years ago to only offer the sale of solar, and here’s why. Although a solar lease may look attractive since there is no up-front cost, there are long-term negative effects from a solar lease. We want to do the best for our customers since they are our part of our community where we plan to do business for many years.
Many times leases offer a lower price per kilowatt hour than the utility. This is attractive to many consumers. However, with an annual price increase, what may save you money in the early years may cost you significantly more than the utility in future years. You can also expect to see two bills every month, one from the solar leasing company and one from your utility.
Speaking of the future, many of these leases are long-term, sometimes as much as 25 years. Because the average family moves within seven years, this creates complications when the house is sold. If a buyer of your home does not assume the lease, it may be your responsibility to pay for the remainder of the lease. This is commonly known as a “buyout clause.” And once you pay off the remainder of the lease, you still won’t own the equipment. If you’re unwilling to pay this a large amount, the lease acts as a lien against your property. This may hold up or even negate the pending sale of your home.
We know that solar is an investment not to be taken lightly. It may be the second or third largest investment you make. A decision of this gravity shouldn’t be made in an afternoon.
By owning solar, you will not only be producing your own clean energy, but you will also be eligible for any of the tax benefits related to ownership. In a leasing arrangement you don’t own the equipment, and any tax credit goes right back to the leasing company – and usually out of state.
While there is no one-size-fits-all solution to anything in life, and leasing may be a viable option for some, we believe owning your own solar energy system is the most effective, well-rounded and beneficial option. When looking at solar systems, be sure to explore all your options and read the fine print.