Residential Solar Lease

Instead of owning your solar system, you can lease the system. With solar leasing you get the benefits of solar with little or no upfront cost. But there are features to a lease system that you should consider before signing an agreement.

Be sure to investigate the financial strength and management capability of the solar company that will own your solar system for 20 years or more. You may also discuss the ability of the solar company to sell your solar lease.

Solar leases are fairly straightforward. A third-party installs the solar system on your property and sells the electricity to you at a monthly rate. The monthly rate is usually fixed over the life of the lease contract or may include an escalator clause. The third-party owner is usually responsible for maintenance and upkeep of the system.

Because you don’t own the system, you don’t get the various incentives offered to solar owners. For example, the 30% Federal tax credit does not go to you but to the third-party owner of the system. You may receive some of the tax credit benefit indirectly through a lower monthly rate, but this would vary from situation to situation.

Source: Eco Watch

Using a solar lease will save you money. But the savings will usually be less than owning your own system (whether financed or not).

The term of the lease contract is generally 20 to 25 years. At the end of the lease period you can renew the contract, buy and own the system yourself, or have the system removed.

With a solar lease, a third-party will own your system for the life of the contract. So, pay special attention to the financial soundness of the third-party. Also, you may want to see if the third-party has the right to sell the lease to another owner.

Pay close attention to the terms of the lease contract. Make sure that you review and approve the system design before entering into a solar lease. The third-party owner of your system will choose who installs the solar system on your roof. The third-party owner and the installer will also decide the panel brand, the size of your system, and where it’s placed. So, be sure to investigate the contract thoroughly.

Having a solar lease may complicate the sale of your home. A buyer may be concerned about taking over the solar lease because the solar system (owned by the third-party) will be attached to the property being purchased.

A solar lease is similar to a power purchase agreement (PPA). The major difference is a solar lease has a fixed monthly payment rate whereas a PPA uses a fixed rate per kWh multiplied by the amount of electricity provided during the month.