Last week I wrote about how your best deal on solar is to buy a house with an existing solar installation, because these homes do not sell for much more than homes without solar.
However, I recently moved from my solar-powered home in Fairmount to a home in Eagle Ridge with a great south-facing roof but no solar features. Naturally, I have looked into having a solar photovoltaic system installed and was pleasantly surprised to see how much the cost of doing so has plunged.
Nowadays, hardly anyone purchases outright a solar PV system for their home because leasing is so much more attractive financially. Here are the options that were presented to me for installing a 10 kW system on my home by three different companies. (I am using round figures, roughly averaging the prices quoted by the three vendors.)
1) Outright purchase: about $40,000 out of pocket up-front cost, with a net cost after tax credits and rebates of about $19,000.
2) Lease with zero up-front cost and a monthly payment of about $100 for 20 years.
3) Pre-paid 20-year lease with zero monthly cost — $12,800 upon installation, with a fair market buy-out after 20 years (probably close to zero).
Leasing includes maintenance and repair, so if the inverter dies in year 10, you pay nothing to replace it under a lease, but you pay the full cost of replacing it if you purchased the system.
This looks like a no-brainer and explains why the vast majority of homeowners are opting for the lease.
So why is leasing so much cheaper than purchasing, especially if you can afford to pre-pay the full lease amount up-front?
The answer, I found, is in the accounting. The leasing company gets all the rebates and tax credits for the installation plus they are able to depreciate the system, which the homeowner cannot do. (On the other hand, they probably owe business personal property tax on each installation.)
Whatever the reason, it makes sense for any homeowner with a decent south or southeast-facing roof to have a leased solar PV system installed on their home. Even with the monthly lease plan, you’ll pay less to the leasing company than you’d pay to the utility company, and you’ll be contributing to a more sustainable, less polluted environment. I’m having a 220-volt electric charging unit installed with the system so I can charge my Chevy Volt, too.