Outright solar purchase is a no-brainer, Rick Peters explains why….
Solar Energy for Homeowners – Buy it or Rent it?
with SES President Rick Peters
Rick, it seems like solar systems are going in everywhere. Why is solar growing so fast?
There are many reasons, including an improving economy, but I think there are two major reasons. While the long term economics for solar buyers have been relatively consistent for the past few years, the fact that solar is moving to the mainstream is huge. Folks are much more comfortable investing after witnessing a friend or neighbor’s satisfaction with their purchase. Another major reason is the development of financing alternatives making it easier for home and business owners to participate in solar without the big up-front payment.
So is it like financing a car?
Yes, very similar. People can buy outright and get the best value, or they can borrow in any number of ways. We offer several simple, low cost loan programs, but candidly, the best value is often through a home equity loan where the interest is tax deductible.
What about leasing a system? I’ve been seeing advertisements for that.
Yes, there are some large national companies offering a zero/low money down lease where you essentially rent the system for 20 years and save a little each month starting in month one. People like this option because it is simple and they don’t have to try to understand the incentives and the payback analysis. The leasing companies like this too because they want people to sign up quickly instead of exploring the other financing options.
One thing to remember with this approach is that you are basically trading one big utility provider for another to save about $10 or $20 per month – with a lot of uncertainty at the end of 20 years when the contract ends. Whether it’s your local utility or a large solar leasing company, in both cases, most of the economic benefit goes to a distant, third party corporation. If you have any doubts, check out the stock prices of some of these companies and you will see who is reaping most of the economic benefit. The Massachusetts Department of Energy recently completed a study that concluded that the net present value (NPV) of direct ownership was more than 10 times the NPV to homeowners when the system is owned by a third party. We recommend that you buy local from a company that will be here to support you in the future if you need it.
That’s helpful. What about the actual costs of solar installation? Are they coming down?
Absolutely they are, although the cost curve is leveling off somewhat. It maybe tempting to wait and see if the cost of solar will continue to decline. However, the current financial incentives are designed to decline also, and this will happen at a much faster rate than the installation costs. For homes in Anne Arundel County, those two factors have combined to maintain a typical simple payback of 6-7 years – for 30 years of energy production. Imagine the savings and the peace of mind to lock in your energy costs for over 30 years!