# Solar System Lease: Your Own Home Power

- Link: https://greenlivingguy.com/2019/02/solar-system-lease-for-your-own-home/
- Published: 2019-02-11T21:57:30-05:00
- Author: greenguruguides

The big news in home solar [system](https://greenlivingguy.com/2011/12/schletter-solar-system-production-capacity-ramped-up/)
lease isn’t the glut of solar panels worldwide. Or this idea that slashed prices
in half and even further.

## Solar System Lease

Because this is what makes home systems more affordable. Also it can save you money
right away on your electric bill.

For example and several years ago, Hal and Brenda Wright of Centennial, Colorado
started looking for solar. Centennial is a town just south of Denver. So they started
investigating solar power for their 2,600-square-foot [home](https://greenlivingguy.com/2016/02/pick-my-solar-shows-you-everything-to-become-solar-power-for-your-home/).
It was “more because of the green aspect than the economic aspect,” says Hal.

#### Amazing Solar Savings

But Hal, a retired electrical engineer, became enamored with the savings. The six-
kilowatt system the couple lease provides 85% of their home’s electricity and cuts
their monthly electric bill, which used to be $110, to $16.50, on average.

### Basics

No, cause the big news is the rise of leasing.

![Solar system lease](https://i0.wp.com/greenlivingguy.com/wp-content/uploads/2019/
01/img_6663-1.jpg?resize=300%2C153&quality=52&ssl=1)

Hal wasn’t averse to buying a solar power system, he says. However a solar system
on a lease. For it made more financial sense. Instead of an initial outlay of more
than $12,000, he made a one-time payment of $5,200 to SolarCity, a leasing and [installation](https://www.tesla.com/)
firm. That sum bought him a 20-year contract for power that will pay back his initial
investment in less than five years and yield savings of $16,000 to $18,000 over 
the life of the contract, he figures.

### Leasing Picked Up!

Leasing has spurred a rapid increase in home solar installations. Though the total
number remains small, according to estimates from the Interstate Renewable Energy
Council, 186,000 U.S. homes had solar electric systems at the end of last year. 
Most of those systems were installed in the past couple of years.

SolarCity and other [solar leasing](https://greenlivingguy.com/2019/10/u-s-study-interest-in-residential-solar-jumps-with-leasing-option/)
firms also offer no-money-down options. With these, your monthly savings is less,
and so is your net savings. Lyndon Rive, CEO of SolarCity, says that homeowners 
who enter into such arrangements pay two to three cents less per kilowatt-hour than
the utility charges. Depending on the price of electricity where you live, that 
will cut your electric bills by 10% to 15%.

Lease or buy? Under the leasing model, solar firms buy equipment at wholesale prices
and finance it with big, relatively cheap loans. They also collect all the federal,
state and local subsidies. Homeowners get cheaper power and don’t have to worry 
about maintenance, which the solar firms handle.

#### Affordable

Leasing can make solar systems practical for homeowners. Those who may have to move
in a few years and worry about investing a lot of money in their home. Why sink 
$12,000 in a home solar system if you may sell the house in two years?” asks Seth
Masia, of the American Solar Energy Society (ASES).

First of all, ASES is an association of solar professionals and advocates. More 
importantly, lease arrangements transfer to the new owner of a house, is selling
point. At the end of a lease, depending on the lease agreement, customers can upgrade
to a new system. Also they can extend the agreement or simply have the panels removed
free.

One risk of leasing now is that no one knows for sure where prices of solar power
systems are headed. If prices continue to fall, you may get a better deal by waiting
to lease. Future energy prices are also a variable. Part of Hal Wright’s calculation
depends on the price of energy rising. In his case, 6% annual increases have been
typical, he says. However, the future cost of electricity varies depending on where
you live.

The most recent report from the U.S. Energy Information Administration says that
although electricity prices have been rising in recent years, they are starting 
to level off and will fall slightly over the next decade. Largely due to the “recent,
rapid decline of natural gas prices,” the national average cost of electricity is
projected to drop 6% from 2010 to 2019, according to the [EIA](https://greenlivingguy.com/2018/11/eia-stated-reduced-electric-demand-halved-power-sector-carbon-emissions/).

### No Upfront

If you have the money upfront to buy a system or can handle a note go for it.  Leasing
enables you so no worries to finance it. Although the proposition may be too expensive;
you should consider buying. Have solar installers give you bids for both leasing
and buying. Of course, if you buy a system, you’ll be responsible for maintenance.
Also you won’t have the option of instant savings.

If you do choose to buy, you’ll pay less than in the past because of the current
glut of solar panels. Consider a six-kilowatt system, which will provide most of
the electricity used in most homes. In 2010, you typically would have paid $8,000
per kilowatt, says Masia, a price that has now dropped to $4,000. So that six-kilowatt,
$48,000 system now costs $24,000 — before subsidies.

![solar power, How to Lease Your Own Home Solar Power System](https://i0.wp.com/
greenlivingguy.com/wp-content/uploads/2018/11/pexels-photo-421888.jpeg?resize=300%
2C192&quality=52&ssl=1)

At current prices, buying a system makes financial sense only as long as federal
and state subsidies and tax credits. Even now it still makes sense. In some areas,
breaks from utility companies continue. The federal government pays for 30% of home
solar systems in the form of a tax credit and did so until the end of 2018. So, 
in our example, the price for a six-kilowatt system after the federal tax credit
is now $16,800.

Five years ago, state rebates (in states that offered them) typically knocked an
additional 25% off the price of a home solar system. However, state and utility 
subsidies have been decreasing along with the price of solar panels. At last count,
more than 20 states had subsidies. The top states for home solar installations, 
not surprisingly, roughly mirror the states with the best subsidies and programs
to support solar power. That’s why solar-friendly [New Jersey](https://greenlivingguy.com/2019/04/the-evolution-and-future-growth-of-renewable-energy/)
has a high number of solar installations.

The solar industry expects that in about six years prices. For it will come down
so much that no subsidies will be needed to make solar power economical. And, industry
representatives say, the leasing model will work without subsidies.

#### Does solar make sense?

In the case of both buying and leasing, the main factors in deciding whether solar
makes sense are the cost of energy and the amount of sunshine where you live. For
example, residents of Hawaii get a lot of sunshine and pay more than 28 cents per
kilowatt-hour, the highest rate in the nation. So it’s no surprise that Hawaii is
one of the top markets for solar. Also, you generally need a south-facing roof that’s
not shaded.

For a list of programs by state, utility and municipality, go to [www.dsireusa.org](https://www.dsireusa.org/).

Many calculators can give you an idea whether your location and energy costs make
you a candidate for a solar power system ([a good one to start](https://web.archive.org/web/20190327231802/https://www.solar-estimate.org/)
with is [http://estimator.solar-estimate.org](http://estimator.solar-estimate.org)).

#### Generally speaking, you may want to consider solar if you live in a place where solar installers do business.

They don’t set up shop in places where the numbers don’t work. SolarCity, the largest
company that leases home solar systems, operates in 14 states — Arizona, California,
Colorado, Connecticut, Delaware, Hawaii, Maryland, Massachusetts, New Jersey, New
York, Oregon, Pennsylvania, Texas and Washington — plus Washington, D.C. That’s 
less than a third of the states, but together they hold 47% of the U.S. population.

The proper size of a system depends on your energy use, roof size and budget.

So if you’re financing the system yourself. As a rule of thumb, pick a system that
generates 70% to 100% of your annual electrical usage.
 Whether you lease or buy
a [home solar power](https://greenlivingguy.com/2020/05/examining-the-pros-and-cons-of-home-solar-power/)
system, you should know that you generally don’t use the power from such a system
directly. Instead, it goes into the local electrical grid and the power is “banked.”

In almost all states, the local utility has to credit you the retail rate (what 
customers pay) for the power you contribute to the grid. If you feed more power 
in than you take out in a given month, you store up credits for future use.

Hal Wright, in [Colorado](https://greenlivingguy.com/2012/02/fedex-unveils-green-data-center-in-colorado-springs/),
got his system a year ago and has had a lesson in the seasonality of solar credits.
He banked credits during the sunny spring and summer months that he used in the 
fall to keep his bills near zero. He paid for electricity again in December through
March, but when we spoke to him in April, he said, “My energy bank is back in the
black.”

Courtesy of Kiplinger’s

July 2012 | By Bob Frick

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 The Green Living Guy, Seth Leitman, is recognized as a green living guru and electric
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