11 Nov

Are solar leases and PPAs affordable?

Read 119 times Tagged under are solar leases and PPAs affordable?


If you've ever been approached by a solar lease or PPA salesperson or have seen ads for these types of financing options, then you've probably heard that these forms of financing are affordable. While their "no upfront cost" sales pitch may seem appealing at first glance, the long term effect on your budget will probably be quite different than what you expected.

In the long run, the reality is that solar leases and PPAs are two of the most expensive ways to have solar on your home or place of business. (At least twice as expensive when compared to an outright purchase of a system). Today, pricing has dropped so low for a purchased system (not a leased system) that a zero to little maintenance, average sized 4.75 kW grid tie solar system that will produce up to 600 kWh per month with only 5 hours of peak sunshine per day can now be easily purchased for less than $2.05 a watt after applying the tax credit or less than $9,6000. While the solar leasing and PPA companies are quoting 12 to 16 cents per kilowatt hour a purchased system can easily yield a rate of 7 cents per kilowatt hour.

Not only are solar leases and PPAs far more expensive in the end than an outright purchase but here's a few other things to consider before signing on that dotted line:

1. You'll pay so much more for a lease than a purchase that's it's actually you who will be over-paying for your own maintenance, monitoring and insurance not the leasing company.

2. You may have trouble selling your home because what home buyer will want to assume your lease payments on a used, outdated solar system, when they can buy a brand new system with the latest technology and keep the 30% federal tax credit and other applicable incentives for thousands less. http://www.latimes.com/business/realestate/la-fi-harney-20150322-story.html

3. After making 20 years worth of leasing payments, you won't even own the system. It will still belong to the leasing company.

4. Check that quote from the solar leasing company and you'll find that most cases, the leasing company won't even mention the brand ot model of equipment that they're installing on your home.

5. You'll be locked in with the same aging solar system on your roof without the ability to affordably upgrade your system for the full 20 year term of the contract. If you bought your system instead, you can sell it at any time and take the proceeds from the sale and upgrade to the latest equipment anytime you wish. You can't do that with a lease because it's not your system to sell.

7. You'll have to forfeit the 30% federal tax credit and any applicable cash rebate to the leasing company and you won't get tax deductible interest on your lease payments. Only a $0 down solar loan or $0 down or PACE financing will provide you with tax deductible interest and let you keep all of your incentives for a much better return on your investment.

Before signing any long term contract with any solar dealer,always  ask if your dealer can offer you a system for 7 cents per kilowatt hour. If they can't, then I suggest that you shop somewhere else. Be smart about your solar investment. Search the Internet for 7 cents per kWh offerings. Learn the truth about fair market pricing before you sign any contract.
Read 408 times Last modified on Friday, 6 November 2015 11:03


With one of those $0 down solar loans that the leasing company is offering you'll have to come up with a 30% balloon payment that is due on June 1st the year after installation, regardless of the amount claimed in the tax credit and you'll have a 2.9% annual payment increase.