Solar: Leasing vs. Buying
Look out! The Solar Leasing Police are on the prowl and they think you’re an idiot for leasing a solar system instead of buying it.
Well, first, we absolutely detest the condescending paternalism of the anti-leasing crowd many of whom we’re guessing probably don’t even have solar themselves (could it be because they can’t afford the big upfront costs?).
There’s plenty of this arrogant, “I-know-better-than-thou-because-I’m-a-solar-expert-and-you’re not” chatter on the Internet. For instance, comments by some self-appointed “Fathers of Solar Buying Correctness” who commented on a recent article, Solar Leases Attracting a New Demographic, about solar leasing on RenewableEnergyWorld.Com. Here are a couple:
Amazing that the banksters (hiding behind a solar cloak) continue to fund such redistribution of wealth–from the poor to the rich.
Fact: The current demographic being targeted are those at the margin (financially) that want to be “green” and aren’t educated enough to understand the implications of the lease terms.
Since we detest this type of paternalism — and it’s not just present in this comment stream on RenewableEnergyWorld.Com, it’s everywhere — we promise never to imply that anyone who leases a home solar system, as more and more people are, is an idiot.
So, what is better, leasing or buying?
It is fairly clear that, in the long-term in most, not all, cases, buying a home solar PV system outright is better, at least from a pure financial perspective. Why?
You, not a solar leasing company and/or a so-called third-party financing firm, will benefit directly from all of the long-term energy savings your system generates. Additionally, up front, you, not someone else, will get the various rebates, tax incentives and SRECs (Solar Renewable Energy Credits) for which you might be eligible.
Of course, as we’ve pointed out before — and this is a fact a lot of the Solar Leasing Police gloss over – most of us are going to have take out a loan to buy a solar system, and that’s going to cost us in interest, which cuts into the personal solar system savings.
$10k is a lot to most people
Additionally, and, again, the Solar Leasing Police completely ignore this, plunking down a big sum, say $10,000 or $15,000, up front, on a solar system means that cash can’t be used for something else, for instance, it can’t be invested in a fast-rising stock , etc.
In other words, there’s a cost associated with putting big sums of money toward one thing, and not another. For instance, in our case, we bought a 5.59 kW solar system outright in July of 2009, but it took us 10 months to save the $10,000 in cash we needed to plunk down. During that time, we had to pull back on paying my wife’s massive student loans down more quickly and were forced to take on short-term credit card debt – which we paid off within a few months of getting the system.
No one among the Solar Leasing Police talks about these kinds of real-life pressures that seriously impinge on people’s ability to buy solar outright even if, in the end, it’s the “smarter” decision.
People accustomed to monthly electric payments
Speaking of other things the Solar Leasing Police gloss over and/or don’t talk about, here’s the biggest one of all:
- People are accustomed to paying for their electricity on a monthly basis, not in 20-year, up-front chunks.
Due to habit, people don’t want to pay $15,000 for electricity for the next 20 years. That’s because, as much as it’s clear that it will save money in the long-term, real, everyday people – except, apparently, the paternalistic Solar Leasing Police – are grounded in the here and now. Not necessarily because they want to be, but because they have to be. They don’t have $15,000 sitting around, and will never be able to save that much to plunk down as an upfront payment for decades worth of electricity and they may, or may not, be able to secure a $15k loan at a reasonable rate.
Can you imagine the response if electric utilities suddenly started asking customers to pay for 10 years of electricity up front rather than on a monthly basis? Even if utilities pitched the long-term savings – maybe they’d lock your rate in for 10 years, most people would balk at paying for their electricity all at once. Yet that’s exactly what you’re asking people to do with a home solar system purchased outright.
It’s worth repeating – and, heck, it’s even kind of fun turning the condescenscion tables on the Solar Leasing Police by talking “down” to them and implying they won’t get this the first time around: The vast majority of people are NOT going to pay, up front, for their next 20, 30, or 40 years of electricity. Never. Ever.
Solar leasing popular in California
This basic reality has been holding home solar back for a long time in the United States. And this same fundamental reality is what’s making solar leasing so popular – three-quarters of home solar installations in California last year were done under a solar leasing agreement.
In fact, the Solar Leasing Police STILL won’t get this. Not because they’re “idiots,” but because they’re so damn bull-headed that they just can’t seem to see outside of their arrogant, one-dimensional views about solar leasing.
And they never will. They’ll continue to shout “idiot!” if you opt to lease rather than buy solar – is there a more IN-effective way to bring people over to your point of view than to imply everyone else who doesn’t see things the way you do is S-T-U-P-I-D?
But don’t let the Solar Leasing Police stop you from taking a close look at solar leasing. Yes, most likely, in the long term you will have been better off buying the system because you won’t have to share your long-term savings with anyone else. However, if you know you’re never going to go solar if you don’t lease a system, and you really want to go solar, then, by all means, take the plunge and lease a system.
Christof Demont-Heinrich is founder, creator andeditor of SolarChargedDriving.Com, which he launched in September 2009.SolarChargedDriving.Com is a unique site devoted to covering andpromoting the synergy between solar energy and EVs (electric vehicles)and PHEVs (plug in hybrid electric vehicles). In addition to offeringreaders a mix of how-to information, news feature and newswire coverage, and news analysis, SolarChargedDriving.Com is an interactive community: Readers can create their own blogs, post pictures and video, createtheir own photo and video galleries, and meet other solar-chargeddrivers online. A journalism professor at the University of Denver (DU), Demont-Heinrich is a lifelong environmentalist who loves to bird, hike, camp, and bike. Articles l Homepage
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