Free Solar Power System: The Lowdown on Leasing Solar

Buying and installing a solar power system is a great way to reduce your “carbon footprint” and is unquestionably a good long-term economic move, but buying a system does have a substantial upfront cost. After federal incentives and rebates one can still expect to pay $10,000-$40,000 for a complete system. However, not everyone lives on a 20- or 30-year plan, for these homeowners there are now a number of companies that offer solar system leasing. Solar leasing provides a number of key benefits, keep reading this guide to learn the ins and outs of how a solar leasing program works.

Solar power system leasing basics

Simply stated the solar leasing firm will install enough modules to correspond roughly to your energy needs, and charge a SET rate at which you will lease the panels each month. The power produced by the panels will run your household, and any excess will be returned to the grid and essentially reverse the direction of your meter. With this system leasing can only take place where net metering is possible.

As more local and regional utilities move to the net metering model, we will no doubt see more ideas on how to leverage solar power to reduce fossil fuel dependence.

Financial considerations for leasing a solar system

Your total cost, for the solar system lease and utility bill, will be less than your current expenses. Another practical benefit is that a long-term lease will hedge against rising energy costs during the lease period. With current energy rates rising annually around 5-6%, your lease will lead to significant future savings.

If energy rates continue to rise at their current rates, the average annual household energy bill (currently $2,100/year, or $175/month) in 30 years will top $8,500. That leads to a monthly payment of $720 for energy. Setting up a $0 down solar lease may save $10 a month now, but will save nearly $550 a month in the future.

The solar power leasing company’s economic considerations

The leasing firms will be the beneficiaries of any government rebate programs. However, the companies have every incentive to pass along a portion of these savings to the consumer, else they risk pricing themselves out of the market. A business that leases a solar power system can write off the depreciation at 5% annually, another financial planning factor that can be used to its advantage depending on its unique tax situation.

Solar leasing expands the opportunity for generating solar power to more and more people, and can be done without a large upfront investment. As with a purchased system, all of the construction, permits, paperwork and electrical work will be done by veteran, skilled professionals. It is yet another win-win solution, which are becoming increasingly common as solar technologies, systems, installations and financial incentives continue to proliferate in an environment of social experimentation and scientific advance.