We all know when things sound too good to be true, they usually are. But we're not able to figure out the "gotcha" in this proposed deal, so we're hoping someone here can.
SolarCity gave us an estimate for a 3.44 kW DC grid-tied system. One of their options is a 20-year lease plan. For about $5800, we'd get:
20-years of solar production
All repairs, including inverter, free of charge
Free removal at the end of 20 years (or we could optionally purchase the system for an unknown price -- probably not!)
The lowest quote we've obtained for purchasing a comparable system is $10,000 net.
Over 20 years, assuming the only repair we would need for a purchased system would be a single inverter for $2000 11 years down the road, the IRR works out to be about 4.7% (terminal value at $10k) vs. 6.6% for a leased system.
So the return on a leased system is almost 50% higher than purchasing one, and we don't have to worry about insurance, higher property taxes, or dealing with repairs. And in 20 years we could get rid of it and replace it with newer technology at a reasonable cost .
The lease is fully assumable if we decide to sell the home within the 20-year time frame.
What's the downside? What are we missing? Any ideas?