Is The Solar Leasing Model Flawed?
When Seattle-based consumer-rights law firm Hagens Berman announced last month that it was investigating SunRun in preparation for a possible class action lawsuit, some installers said it was a statement about the leasing model.
Jeff Mayer, CEO of Soluxe Solar in New England, said he expects to see similar lawsuits filed against other companies that sell solar leases. The problem isn’t with SunRun, Mayer said, it’s with the leasing model.
Hagens Berman said in a statement last month that it’s investigating “reports that the company engaged in deceptive practices in the lease of its solar roof panels to consumers” and is researching to see if there was any violation of California law.
Mayer founded his company on the belief that anyone who installs solar panels at their residence should own them. “We believe power purchase agreements are bad for consumers,” he said. He and his partners come from backgrounds as executives at utility companies, which is why he said he knows the foundation of the argument for solar leasing is cracked.
“Most leasing contracts are sold on the assumption that the consumer will save money because utility costs are expected to increase over the years,” Mayer said. “But, the truth is that utility prices have been flat to down and consumers are being misled.”
He said that the introduction of shale gas to the market has reduced the cost of producing energy from fossil fuels. While solar is still viable in this environment, Mayer said, the price escalations built into leasing contracts tend to be unfair.
Some solar leasing companies advertise to customers that electricity prices have been rising 5 to 7 percent annually. “That’s just not true,” Mayer said.
Leasing contracts generally span 20 or 25 years. There is a chance, Mayer said, that power prices could skyrocket and consumers could still come out ahead. But based on historical and current energy markets, consumers who lease solar panels will end up paying more for power than if they didn’t have them, he said.
However, buying solar panels is a different story. Consumers pay the upfront cost, which is offset by utility rebates, along with state and federal tax incentives. And then the power the panels generate is theirs forever, Mayer said.
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