Forbes recently posted a piece lauding the next solar boom and the part solar leasing could play in making it happen. Taken at face value, the idea sound really good. For no money down, you and your Maryland neighbors can lease a solar array, get it installed and buy the energy it produces from the leasing company at a lower rate than you currently pay your electric company.
Sounds nice, right?
You should know that the facts may not actually work in your favor. It is true that, if your credit is good enough, you can get a solar leasing deal. You may experience slightly lower energy costs at first and they do pay for system maintenance. There are, however, some serious drawback to leasing that they just won’t tell you about. Things that might make buying your own solar power system much more attractive for the average home owner.
That’s the great selling point for solar leasing companies. No money down and 20 years to pay. What they may not tell you is how much it costs to get zero down and that at the end of the lease you have to buy the panels anyway. If not, you have to send them back to the leasing firm and start the process over again to keep getting solar power. Some Maryland home owners are getting a better deal by taking advantage of $0 down solar loans. These loans are easier to qualify for and you can take advantage of all the state and federal incentives to save more money.
You do not know what solar leasing actually costs
You just signed a 15 to 20 year lease to install solar panels and agreed to buy power from the leasing company. Did you read the fine print that explains how a payments escalator works? You agreed to annual payment increases of 3.9% or more for the next twenty years. On average, that means that when the lease ends your total payments could easily equal three times the cost of buying your own system.
How free is free maintenance?
Many of these leasing companies tout free maintenance as a powerful incentive to sign up. It stands to reason that they own the equipment and should bear the cost for repairs and maintenance. Think about how much you are actually paying them over the term of your lease. They are not paying the maintenance costs, you are.
What if you move?
Many home owners will have to move before the term of their solar leasing arrangement expires. Things happen; jobs change and better opportunities can open up in another part of the state. If that happens, you might be stuck with the cost of leasing. You signed the agreement and it can be very difficult to transfer to a buyer interested in your home.
Buying home solar actually costs less
You already know that leasing is going to cost you a lot more in the long run. What you may not realize is the real benefits for home solar you missed by signing a solar leasing agreement. There are state and federal tax credits and incentives for installing home solar that can easily add up to more than half the cost of installation.
Compared to buying home solar, solar leasing just might be the most expensive mistake you can make.