In this month’s Scientific American, writer Christopher Mims reports that a few enterprising businessmen have figured out a way around the daunting cost of installing solar panels on private homes: don’t buy the things—rent them.
It’s a brilliant idea. Here in Arizona, where a cloudy day is so rare as to elicit excited news reports from local television stations, the one thing that keeps people from covering their rooftops with silicon is the breathtaking expense. My electrician, who solarized his own home, said it would cost $30,000 to switch my house to solar power. It nets out to around $17,000 after various government rebates. But still…
That’s a lot of $300 summer power bills, and, as much as I’d dearly love to get off the grid, it’s way more than I can afford pay for a principle.
One of these outfits, SolarCity, proposes to install the panels on your home for nothing and lease you the equipment. The combination of a reduced power bill and the monthly lease payment represents a significant savings on your power company’s bill (or so it is claimed). And SolarCity points out that on average power companies have been jacking up the cost of electricity about 5 percent every year, so if you lock in your rate with a several-year-long lease agreement, your effective savings increase at 5 percent a year.
In a slightly different spin on this idea, SunRun, a company based in San Francisco and serving Northern California, charges around $1,000 up front and then sells you the power. Power costs, we are told, should be less than or about the same as your power company’s, but one way or the other, you get that comforting self-righteous feeling of powering your home with “clean” solar energy. It would be good to know what’s involved in the large-scale manufacture of solar panels and their ancillary equipment, but for the nonce we won’t look too hard at that issue.
Apparently a number of cities and states are also experimenting with ways to make retrofitting your home affordable, and many will provide rebates for residents who install various kinds of energy-efficient devices. Mims reports that Berkeley and Boulder will lend homeowners enough to pay for solar panels and installation, allowing them to repay the loan over 20 years as part of their property tax bill. There’s no sign of these programs at either city’s site, and so it’s impossible to tell whether such programs, if they exist at all, would save you anything month to month.
At this time, the cost of rooftop solar still exceeds the cost of buying power from a local utility. For me, that’s the bottom line: my summer bills are already way more than I can afford, and they never will go down. I don’t like leasing, which resonates of debt payment. And I’m certainly not going to lock myself into another $30,000 worth of debt slavery to install my own system. But I might put those compunctions aside for a no-money-down arrangement that would guarantee lower power bills than what I pay now.
Unclear what happens if you sell your house while you’re in the middle of a lease with an outfit like SolarCity. It would not be good if you had to pay the whole cost of the solar array out of the proceeds of the sale.To recover it, you’d have to jack up the sale price about 30 grand—good luck with that, anytime in the foreseeable future! Since yours would be the name on the lease, transferring the monthly payments to the buyers would be problematic: if they default, you could end up having to pay for their power until the lease expires.
What’s your take on this? Would you lease a solar power system from a private company?
I think solar panels are the equivilent of purchasing a car or even a home. If you can’t afford it, trying to shoehorn a solution may be an option, but it is probably a bad option.
Consider:
1) Who is responsible for repairs / maintenance?
2) How long are you signing a contract for?
3) What is your penalty to break the contract in the event that you are selling your home and the buyer does not wish to continue the arrangement?
4) Is it a rent-to-own arrangement where you might own them after a period?
5) Who is responsible in the event of damage or loss from things like fire? What impact would it have to your insurance if it is your responsibility?
I think it’s a good idea in theory but depending on how the answers fall into place, it might be a little too risky. I’d hate to enter into an arrangement only to have to move and find yourself paying thousands to have them decommissioned, or find that insurance implications offset any savings.
To me, it does present an alternative to people that might not be able to afford it, but then again, so does leasing a car. Everybody knows that for most cases, leasing a car is not in the person’s best financial interest, and I think the same goes here. To me, if you can’t afford the up front cost through cash or home equity, I simply look at is as something you can’t afford and should wait until you can before proceeding.
Not sure how Solar City works but there is another option I CAN speak to.
See http://WeRentSolarPanels.com for a link to more information.
With this option the company pays for maintenance, install, permits all the hassles people worry about AND the panels are transferable without a fee to the next person to own the house. No deposits. No Credit checks.
IN FACT they guarantee no price increases for 10 years so the next person to buy the house actually keeps the existing rental rate WITHOUT an increase for the remainder of the agreement.
For more information check out the website and if you want to help switch persons to solar they pay a referral fee which is quite nice.
@ Paul & Money Beagle: Thanks for your comments! I tried to reach SolarCity to ask these questions of a PR person, but there’s no “contact” form on their website and the only way to get to them is by telephoning a sales rep. A bit pressured for time, I really didn’t feel like trying to talk my way past a salesperson, nor did I want them to lift my phone number.
Making a switch to a new homebuyer would, I think, require some legal papers and a new contract for the new homeowner, plus written agreement from the solar panel supplier that you were no longer liable for the rental payments. You’d need to be very careful that the old contract couldn’t come back to bite, if the person you sold to turned out to be a deadbeat.
IMHO, though, this indeed could be an effective strategy to make full-house solar energy affordable. If the total of rent and cost of electric were less than your current average power bill, obviously you not only could afford the plan, you’d come out ahead. If the combined price were the same as your power bill, then it still would be affordable and worth doing if you’re strongly committed to going green.
Some people who are truly dedicated to that commitment might even be willing to pay more than the current power bill for the sake of using solar energy, just as some are willing to spend more on a Prius instead of buying a small, efficient gasoline-powered car. Most of us can’t afford to pay more for principle, however, and so I expect solar panel rental companies will need to underprice traditional utilities, at least for the foreseeable future.
Electricity from the grid is the best bargain around. That said, costs are sure to go up in the near future, upgrades to the grid and plants need to be made and that will cost lots of $$. Will the upgrades be made in time before rolling blackouts occur? The fuel to produce power will surely go up, too, unless it’s hydro.
Then we have the sun being so quiet for the past 2 years, once the she wakes from her slumber , the effects will be felt here on 3rd rock.
I guess I see alternative energy as a safety for the future. I’ve lived off grid for 2 years. Life will not be fun without power.
I’ve been making this site part of my weekly read list and bookmarked this page https://funny-about-money.com/2009/11/25/rent-a-solar-panel/ AND Rent-a-solar-panel | Funny about Money – is a interesting title AND TOPIC OF DISCUSSION! Thanks for remaining a reliable source for sustainable living updates. Thanks – Horace Holden