A solar lease is one of the most common ways to finance home solar systems today in California, Arizona, Colorado, Hawaii, New Jersey, New York, and other areas where solar leases are allowed. But how does this type of solar financing work and how does it save you money?
Solar leases can vary slightly by the solar leasing company and your region, but there are several common features:
$0 to low money down. Solar leases are popular because they can be installed for as little as $0 down, so there’s no large upfront payment. Similar to a car lease, you’re not buying the solar system, but renting it, usually for around 20 years. The lease payment also factors in any available rebates or tax credits.
15% to 20% savings on your electric bill. Solar leases are calculated so that your combined solar lease payment and your new electric bill are 15% to 20% lower than your old electric bill before going solar.
The production guarantee. All solar leasing companies offer a production guarantee, meaning that if your solar system produces less solar energy than predicted when you signed the contract, no worries. You’ll receive a refund at the end of the year for the difference between what was predicted and your actual production.
Free maintenance, monitoring, and insurance. Solar leases essentially have “bumper-to-bumper” warranties. If anything goes wrong, the solar leasing company takes care of all maintenance, repairs, and insurance against theft or damage to the solar system. You’ll also get a free solar monitoring system, allowing you to go on the web and check on how your solar system is performing.
You can transfer the contract to a new owner. If you decide to move before the end of the solar lease, the new homeowner can take over the remaining payments—and the solar savings. Many home buyers see solar as an advantage. In fact, studies show that solar homes sell faster and for more money than comparable homes.
An option to buy or remove the panels. If you or the new owner reaches the end of the lease, you’ll have the option of buying the solar system at fair market value, or the leasing company will remove the solar system at no charge. Of course, you can also sign a new contract and replace the existing solar system with a new one.
The escalator. Solar leases commonly have an “escalator.” The escalator isn’t a moving stairway, but a financial term. It means that, depending on your area or the leasing company, your solar leasing payment may raise 2% to 3% per year. However, usually your regular utility bill goes up by the same amount or more, so your solar savings will remain about the same over the course of 20 years.
Those are the highlights of solar leasing. To find out how you can go solar with no money down and save up to 20% on your electric bills, contact REC Solar for a free no-obligation solar leasing quote. In just 20 minutes, you’ll see how you can save thousands of dollars with a solar lease.
In our next Solar Financing 101 series: What’s a Pre-Paid Solar Lease?