The Bad Economics of Solar Leases and PPAs
Solar customers have many options and decisions to make for rooftop solar systems – lease or buy, get a loan or pay upfront, what sort of system to get, which manufacturer to buy from, etc. At Aikyum Solar, we want to help you get a top-quality solar system and great savings with a payment system that benefits you. That’s why we encourage you to purchase, not lease your solar system.
You’ll be surprised at how much you can save buying the system, as compared to a solar lease. When you pay for your system up-front or get a 0$ down solar bank loan, after a four to seven year payback period you will enjoy the full benefits of free electricity. But if you lease, you are contractually obligated to continue lease payments for 15+ years. Over the life of your system this lease commitment can cost you $40,000 or more. Or you may pay $0.12 to $0.20 per kWh with a power purchase agreement (PPA) plus annual rate escalations. Ouch! It’s much better to own your system: paybacks are 4-7 years and you will generate electricity for a minimum of 25 years.
What’s a Solar Lease?
You enter an agreement with a solar leasing company to install and maintain a solar system on your property, for zero cash down. After the contract period ends, you can renew the lease, buy the solar system, or have the leasing company remove the solar system.
What’s a PPA?
A power purchase agreement is similar to a lease – the leasing company installs a system on your property, and you pay them a monthly fee. However, unlike the solar lease, the leasing company owns the output electricity outright, you pay them a monthly fee (which can increase over time), and you purchase your power from them.
So: A lease or PPA gives you stable electricity pricing during the lease period and you pay nothing up-front. What’s the catch?
Moving when you have a solar lease can be a nightmare! Transferring your lease to the new homeowner can be tricky. If they don’t want to or cannot continue the solar lease, you may have to pay the full purchase price of the solar system from the leasing company or pay off the remaining lease payments.
You also miss out on some of the benefits of owning your own solar system! If you own your own rooftop solar system, you qualify for a 30% income tax credit. But if you lease, then the leasing company gets that tax credit, not you.
Aside from those benefits of owning your system, ownership is also just a better long-term economic option. The leasing company has to make a profit, and the money they make comes out of your solar earnings.
If you can’t pay the full system cost right now, a much better option than leasing is to borrow the money for your system, either with a home equity loan or a special Enerbank solar loan. You pay nothing up front, selling your house isn’t such a headache, and you can still qualify for solar rebates.
Advantages of a HELOC or Enerbank Solar Loan
- Almost all homeowners with equity in their home and no recent bankruptcies qualify (no specific FICO minimums)
- You can claim California Solar Incentives like the 30% Income Tax Credit and local utility rebates (available for Anaheim Public Utilities, Riverside Public Utilities, LADWP, and Moreno Valley Utilities)
- Interest on loan is tax deductible
- The loan process is easy, and Aikyum Solar will help expedite your paperwork
Maintenance and Production Guarantee | Aikyum Solar
Aikyum Solar doesn’t abandon you after installing your solar system; we offer system monitoring, and a 25 year production guarantee. Solar leasing and PPAs may give their sales pitch, about not having to worry about your system malfunctioning or under producing, but at Aikyum Solar we offer all of that within your solar panel warranty.
We use online monitoring software to make sure that your system is producing as much energy as we predicted. If your system doesn’t meet our predicted yearly production anytime in the next 25 years, we’ll pay you $0.10/kWh deficit.
So what does a lease get you? Eventual money loss compared to owning your system, a hassle when you decide to move, and no tax credit or other rebates.
Start your journey to clean energy, great savings, and own your solar panel system outright with Aikyum Solar. For more information, contact us at [email protected] or at 1-(888)-9898-SUN (768).
Aikyum Solar can provide you a complimentary solar quote for your residential or commercial property at your request.
