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In 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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That's truly a wonderful news. If this calculations and numbers are real, than I think that most citizens would have liked to get involved in so very easy financing of domestic solar power system.
4 kW is a nice power for domestic system. What is the price for such system, if purchased by one payment?
The price of solar systems vary significantly depending on the state where they are installed, how they are mounted, and if they have batteries. From the SolarCity website, it looks like a 2.4 kilowatt system after all the state and federal incentives would cost $17,800. I assume this is a roof mounted system with no tracking devices and batteries, that is connected to the electric grid.
Sarah, thank you very much for your fast answer! I feel quite 'sick', if I compare your prices with UK prices. Here, everything is so much more expensive and the 'wise government' had even closed its own renewable incentive program, because it was too successful.
Unfortunately, not all prices in US are nearly that low. California is the exception, but even their program lessens over time.
The federal tax credit is set to expire at the end of this year, which reduces the cost of a residential system by $2,000. Congress has tried a few times to extend it, but nothing has materialized.
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