LEASING OR POWER PURCHASE AGREEMENT

While leasing might be ideal for some buyers, it isn’t right for everyone. As a lessee, you will have to reconcile the benefits of leasing with:

Solar leases or PPAs typically last 20 years – sometimes longer. On one hand, two decades is a long time. On the other hand, many utility companies already enjoy a local monopoly, which is tantamount to a lifetime “contract.” They can raise rates with fictionalize information to their state’s utility commission. I ask one question here, why are regulated monopolies publicly traded on Wall Street??

Owning your own solar electric system qualifies you for a 30% federal tax credit. If you lease your system, the leasing company gets to enjoy those benefits – not you.

Those solar electric system isn’t yours, it belongs to somebody else. To many homeowners, not having control over equipment that lives on top of their homes simply isn’t appealing. Some of the pitfalls is you lose control of something mounted onto your roof. When and if the solar system on your roof needs maintenance be sure to get a guarantee from this leasing company that they will pay NOT charge you for the system to be taken off and put back on to the current National Electric Codes (not an easy item to promise due to continued code changes). Of course most of the sales people are very good at what they do, selling, but typically know very little about how a solar electric system works and definitely don’t know how to design or engineer a system for peak or optimum output. Asking a lot of questions about a subject or technology you know little about is also very difficult. On the other hand you know that putting holes in your roof needs some form of guarantee backed by a third party insurance company. Third party insurance gives you the owner of the home a level of comfort just in case this company dissolves.

Sure you’ll likely save some money on your current monthly electric bill, but remember this leasing company is using your roof for free, got the federal tax credit, and getting service after the installation can be spotty at best. Certainly you can always purchase the solar electric system at a later date from this leasing/power purchase agreement company, if you want. The caveat here is what is a fair price? You need to get a future present value of your unowned system by this company. Leased system when priced after the fact always run more than had you purchased a solar electric system outright or with financing.

Categorised in: Solar

This post was written by admin