In the last 5 years, solar has grown exponentially in the U.S. There have been several reasons for this, but one of the reasons has been the creation of solar financing options that never existed in the past. One of these options is the solar lease.
A solar lease is a lot like an automobile lease – or more accurately, it’s like a lease for a Toyota Prius.
If you lease a Prius, you get the benefits of driving the car, you save on gas mileage, and you get some bragging rights. You won’t get the car title or the tax write-off for owning a hybrid, but you also don’t have to pay $30,000. You just pay a monthly fee, and at the end of your lease, you have the option to buy the Prius.
Similarly, with a solar lease, you get the electricity generated from the photovoltaic (PV) energy system, which can cut your utility bills in half (or more), and you promote clean, renewable solar energy – instead of using dirty fossil fuels. You don’t have to pay $30,000* for the PV System, you just pay a monthly fee, and at the end of your lease, you have the option to buy the PV system at fair market value. Your PV system maintenance is typically covered under the lease too.
The solar lease model, and its cousin the Solar Power Purchase Agreement, first become popular in California and have spread across the country to East Coast states where local rebates and tax incentives make this financing scenario possible.
When deciding whether to own or lease a solar energy system, you should ask yourself some of the same questions as if you were determining whether to buy or lease a car, and a few more.
• Do I have the cash to buy the system outright?
• Do I have access to cheap capital?
• Do I view this system as a long-term investment?
• What are my investment goals?
• What are my environmental goals?
Only solar energy system ownership allows you to claim: the federal tax credit (which accounts for 30% of system costs), state rebates (which can account for up to 40% of system costs), and income from selling your solar renewable energy credits “SRECS” (which can pay back more than 30% of system costs over 5 years). So, if you are looking for a clean energy investment that gives you tax benefits and provides returns in the long-run, solar ownership will be a great option for you.
On the other hand, if you want to “go solar” and get the benefits of reduced energy bills, but you don’t have the required capital and tax appetite to make use of the solar tax incentives, then a solar lease could be the perfect solution for you.
About Sol Systems
Sol Systems is a Washington D.C. based solar energy finance and development firm that was built on the principle that solar energy should be an economically viable energy solution. Sol Systems enables solar developers, homeowners, and businesses to fully realize the value of their solar energy systems by providing them with a range of options for selling their SRECs. To date, Sol Systems has helped over 1,100 customers with projects ranging from 1 kW to over 1 MW realize the value of their SRECs.
Sol Systems currently operates in Delaware, Indiana, Kentucky, Maryland, Massachusetts, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Virginia, Washington, D.C., and West Virginia and has partnerships in place with over 100 solar installers and developers. For more information, please visit www.solsystemscompany.com.