Interesting article. I don't know the first thing about the solar leasing arrangements, but the gist of the article seems to be that (a) the owner/builders of the leased systems are able to get tax benefits through depreciation not allowed for residential owners, and (b) in order to maximize those tax benefits, they are exaggerating the costs of building the systems for tax purposes.
Point (a) is certainly true, and has always been the case. If a business buys a car, computer, building, or solar panel, the business gets to deduct the cost of that capital investment over a period of years as a business expense. This is nothing new and entirely proper as long as corporate taxes are based on profits rather than gross revenue.
Point (b) is more problematic. If true, then this is approaching, and possibly crossing, the line of tax fraud. There might be some "soft costs" which can be allocated to different projects to maximize tax benefits, or interlocking agreements for multiple projects, but that starts to get really dodgy. For example, every company has administrative overhead which can be allocated to different projects. But if the solar installer preferentially assigned that overhead to leased projects rather than sold projects (thus inflating the cost of the lease projects and earning more profit on the installations which were sold outright) you might be able to get an accountant to sign off on it, but the IRS won't appreciate it.
File this under "things to watch…"
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No electric car yet. System size is going to replace close to 100% our current usage to there is definitely room to add a car.
Pre-paid lease subsidy seems to be the biggest variable in pricing ranging from $0.15 to $0.50 per watt discount over the cash price. I am told that pre-paid lease offers a depreciation benefit to the lease holder with a present value of about 10% of the purchase price over and above the federal tax credit. Each company decides how much of that they want to share with you or keep for themselves.
I thought this article was pretty good on the solar leasing, http://www.pv-tech.org/guest_blog/th..._solar_leasing. The point of view of the article is that tax advantages of solar leasing is an unintended subsidy and represents a corporate tax loophole that should be closed. I believe Solar City is currently being investigate by the IRS for exploiting this loophole too aggressively.
The pre-paid lease if fully transferable on sale. There is always a risk doing any kind of home improvement that you could hurt the home value to some buyers. When I was looking at homes with 5-10 year old solar on the roof, I thought negative even though there was probably some positive present value. I think that applies to all solar installs, lease or not. I suppose there is a little more complexity with a lease that might turnoff some buyers but with 60% of new solar purchases coming on leases this is quickly becoming the norm not the exception. Anyway, we just bought the house and plan to stay for awhile.Leave a comment:
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pre-paid lease is also one of the options I am looking at, so far it appears to be the cheapest. I'm not sure that I understand the the downsides to pre-paid lease, can somebody elaborate ? For standard lease there are many, escelators, selling the house the person has to assume the lease, etc. But on a pre-paid lease if you sell the house the new buyer just has to keep the panels on the roof and gets to enjoy all the free electricity that the panels generate (assuming net metering). I would think it would be a selling point on the house, nearly the same as if I purchased the panels outright and left them on the roof for the next home owner.Leave a comment:
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$3.65 is not a bad price, I'm in Livermore and settled on $3.75 per watt before incentives.
You need to look at the restrictions you will have with a lease, such as if you sell your house. If you plan on keeping your house for the duration of the lease, I guess you don't have to worry. But things and situations change and if they do, a prospective buyer may not want to assume the lease. That is one big reason I opted to buy.Leave a comment:
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NorCal quote ready to go with sungevity
I've collected a several proposals from local guys and big guys. After all is said and done I am thinking the sungevity prepaid lease makes the most sense.
I am getting a 7kW-DC system with 28 ET 250W panels and 6kW power-one inverter. No complicated install issues.
Quoted system price is 27K or $3.86/W.
Option 1 - pre-paid lease $15,258 or $2.18/W
Option 2 - cash after incentives $18,902 or $2.70/W
A couple other quotes get me to $3.65/W before incentives. No other quotes got me under $2.50 after incentives.
From reading recent posts I understand that I should be targeting $3.40/W before incentives. But that pre-paid lease after incentives still seems lower like a very good deal. Is sungevity holding that purchase price high to help maximize all their tax and incentive savings? If I take the standard federal tax credit off the $3.40 my $2.18 still looks pretty good and I can't find anyone selling for $3.40 in northern california.
Any pearls of wisdom before I pull the trigger with a sungevity pre-paid?
Peter
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