Solar Service,Commercial Solar Service
Written by Lisa Walsh

The Fairytale of the 25 year Solar Workmanship Warranty

Commercial Solar Service,Solar ServiceIf you’re like most solar shoppers, you prefer two or three bids on a substantial home improvement project; enabling you to sanity-check pricing, design options and find the overall best contractor-fit.  Included in these proposal comparisons is the Warranty. Most solar systems come with 3 warranties:

  1. Solar module manufacturer’s warranty; usually 25 – 30 years,
  2. Inverter(s) manufacturer’s warranty; usually 10 – 25 years (inverters convert DC energy to home-accessible AC energy)
  3. Workmanship warranty – entirely separate from 1 & 2 above. This insures the design and installation, insofar as contractor/labor portion of your install is covered for a given period of time, as determined by the installation company.

Industry Standard

As the popularity of solar has increased – so has the number of competing contractors and their accompanying solar proposals. All of these proposals should include a workmanship warranty. What will differ is the duration of the workmanship warranty. The standard duration for a residential solar system was always 5 – 10 years until a couple of years ago when some contractors started offering an unprecedented 25-year workmanship warranty. This is a good thing, right? On paper…sure.

Compete only to Beat

With over 35 years in the solar industry, it’s fair to say we’ve seen a lot of solar installers come and go; especially in the last five years. The go-ing usually brings with it a slew of phone calls to our service department as solar system owners panic about no longer having their contractor around to honor the workmanship warranty; particularly those looking to resolve existing issues. Ironically, these are sometimes homeowners that chose the contractor over us due to a workmanship warranty of shorter duration. We have stuck with the industry-standard of 10 years, whereas some other installers have increased to 25 years to match the manufacturer warranties.

So, the big question – and the reason for this current article is – Why? If some of our competitors are offering a 25-year warranty – why don’t we? Seems only natural, given the fact that we’ve been in business for longer than 99% of them – greatly increasing the probability that we’ll be around to honor an extended workmanship warranty.

The Big Answer (in two parts)

  1. We’re keeping it Real: Understandably, a 25-year workmanship warranty is attractive to a homeowner because – by design – it matches the 25-year solar panel warranty. This does not change the fact that a workmanship warranty exists entirely independent of the installed equipment warranty(s). A contractor’s history, fiscal health and future plans have little or nothing to do with the equipment warranties. Given this, we avoid inflating the language in our contracts to provide misleading comfort to a home or business owner, with the sole purpose of beating out the competition at contract-signing time.
  1. We’re still keeping it Real: Of all the orphaned solar projects we’ve come across – we cannot cite a single known instance where a homeowner has taken legal action over an abandoned workmanship warranty item; simply not worth the court fees or the hassle. Most exert their energy on finding a contractor who will fix the problem as soon as possible and get their solar system restored to full working condition. Hence, the true value of the workmanship warranty is contractor integrity and the likelihood of whether they both intend to and will remain in business to honor their contractual agreement. For most solar contractors, the standard ten-year commitment reflects a realistic forecast of longevity and commitment; avoiding the temptation to head off into fairytale land in order to beat-out the competition.
Commercial Solar Service,solar services
Written by Rick Peters

Buying vs. Leasing a Solar System

Commercial Solar Service,solar servicesThe popularity of the residential solar lease has increased dramatically in the last several years as residential solar migrates to the mainstream. Big financing companies have been aggressively marketing these leases and a great deal of media attention has followed. It is a truly exciting development for the industry and prospective buyers since it expands the market to include many who might not have had the means to do so before now. As a result, many prospective buyers are now faced with the choice: Is leasing right for me or should I buy my system outright?

HOW DOES A SOLAR LEASE WORK?

In a typical leased scenario, the financing company owns the solar system as well as all the incentives associated with it, while the homeowner gets the solar energy that it produces for the duration of the term. The financing organization typically contracts with the homeowner for a 10 year monthly payment that is less than the monthly savings from solar, producing a monthly savings from month one for the homeowner. At the end of the term, the system is usually available for purchase at “fair market value”, but there are various options available for acquiring the asset. In addition, the homeowner can buy down the monthly payment by putting down some cash up front as a down payment. As would be required for any type of lease, the customer must have good credit.

THE DETAILS ARE COMPLEX, BUT THE BOTTOM LINE IS NOT…

Should I lease or buy? Well, it’s not as complex as you might think. In the majority of cases, if you can afford to purchase the system outright, your return on investment will be much greater than if you lease it. Why is that? A system owner who can leverage all of the available incentives can expect an ANNUAL return on investment of 10 – 15%. That is quite a return in today’s economic climate with an uncertain stock market and savings accounts paying less than 2%. If you choose to lease your system, the available incentives are going to be leveraged by the leasing organization, allowing them to profit significantly from the deal, even after they factor in your monthly energy savings from solar.

THEN WHO SHOULD CONSIDER A LEASE?

If you don’t have the cash to buy your system, then consider other sources of financing like a home equity loan or some other low interest loan that is well below 10%. Many installers offer 6-12 months “Same As Cash” financing to allow the buyer to capture most of their incentives before having to pay for the system. If these avenues are not available to you, but you still have good credit, then leasing might be the best route. Another reason to consider leasing is your tax liability. If you don’t have a federal income tax obligation because you annual income is not large enough to take advantage of the 30% federal tax credit then leasing is definately for you – but do remember, you have until the tax year of 2016 to use up your federal tax credit – even if it’s only a portion each year.

Incentives do vary…