Solar Leases Makes Cents

solar%20panels%20house.jpgIn California, a combination of state incentives, a federal tax credit, and a new solar leasing program could create the perfect storm for the state’s solar industry. SolarCity is changing the landscape of the residential solar market in California and the Phoenix metropolitan area by offering solar leases, which significantly reduces the upfront cost of going solar.
“Customers have called for alternatives to solar purchasing, and our innovations in financing will allow them to get the benefits of renewable energy quickly, easily and affordably,” said David Arfin, Vice President of Customer Financing at SolarCity.

The Solar Company
SolarCity takes responsibility for installing, maintaining, and monitoring the solar system. The energy output of the system can be monitored through a website, which the homeowner also has access. This allows performance issues to be addressed very quickly by SolarCity, without the customer having to notify them. The homeowner benefits from the monitoring system by easily knowing the value the system is providing.
The Homeowner
A typical home with a $225 electric bill can have a 4 kilowatt solar system installed. At current electric rates, the system will lower the electric bill by an estimated $150 a month. As the cost of electricity increases, so do the savings. The initial cost of the system is $2,000, with a monthly payment of $125. The monthly payment will increase by 3.5% annually, but I would bet that electricity costs will go up more than that. Maintenance and repairs are free of charge to the homeowner.
The Financial Side
The leasing program is made possible by a financing program that is backed by Morgan Stanley. “This transaction will allow the consumer to source environmentally friendly power without having to make a large capital investment,” said Aaron Lubowitz, Managing Director at Morgan Stanley.
SolarCity is able to take advantage of additional federal government incentives because of a tax credit that is available to companies. This lowers the overall cost of the solar system for SolarCity, with savings that are not available to homeowners. “Leasing is actually financially better for the homeowner than purchasing the system,” said Lyndon Rive, the company’s Founder and Chief Executive Officer.

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Sarah Lozanova is a regular contributor to environmental and energy publications and websites, including Mother Earth Living, Energy International Quarterly, Triple Pundit, Urban Farm, and Solar Today. Her experience includes work with small-scale solar energy installations and utility-scale wind farms. She earned an MBA in sustainable management from the Presidio Graduate School and she resides in Belfast Cohousing & Ecovillage in Midcoast Maine with her husband and two children.