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Here is a decent article from the NREL on solar leasing. It was written in 2009 so some of the numbers are a little dated but the point remains the same, they say the depreciation benefit is 26% of total system cost. I estimated 20% probably a different discount rate assumption.
This means that on typical $20,000 you have a out of pocket purchase price of $14,000(in California all we get is the federal tax credit).
The pre-paid lease agreement has additional $4,000 in depreciation incentives to play with so your lowest pre-paid price would be $10,000 (which you would never get). The leasing company has some costs associated with the lease including the monitoring, removal at the end of the lease, sale/marketing etc. I would estimate maybe $1000 is eaten up by lease cost leaving $3000 up for grabs as either profit for the lessor or a discount for the lessee. Getting half that $3,000 seems reasonable assuming you have a fair starting system cost. I found that most of the leasing companies quote a high system/purchase price. Better to get a feel for real pricing from someone not pushing leases.
You can get an even bigger tax savings if you use a home equity line to pre-pay the lease(similar to a outright purchase). In fact, this article claims that total of all the tax subsidies for a solar lease could exceed the overall value of the system. The article is basically arguing that solar leases scam the federal government.
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While that might be the case for Kirby, where you're unlikely to be comparison shopping among Kirby salesmen, an astute solar customer is going to look at - among other things - the final price offered by various different competitors. Whether or not that price entails a "special discount" is immaterial: the bottom line is obviously what's important.Leave a comment:
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Back in 1970 I went through a Kirby vacuum cleaner sales program - the advertised for people to sell electronic goods which turned out to be Kirby.
One of the hooks was to get people a "special" discount - one of the easiest ways to snag a customer.Leave a comment:
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Seems like a nice way to ask for discount. The industry has made it so easy to comparison shop. I found buying solar is way easier than buying a car. In about an hour you can get 4 or 5 quotes and everyone seems to understand they are being comparison shopped and talk openly about the competitors. I really liked my local solar guy who was no nonsense and straight-forward but he didn't have a lease option.Leave a comment:
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Peter's description of the prepaid lease is accurate. What you are describing appears to be a PPA not really a lease. A true lease doesn't provide you with a reduced electric rate - you simply get the use of all the electricity the system generates just as if you purchased. Leasing really is just another form of financing with the caveat that you generally don't own the system at the end of the period. It is comparable to leasing cost-reducing business equipment and not anything like leasing a personal car. With a solar lease, there are often buyouts available and no one really knows what the lessor will do at the end of the lease - it's quite possible the lessor will abandon the system rather than incur the costs of removal, cleaning, testing and marketing of a pile of twenty year old panels.
There is no "best" way to go solar. It all depends on your own individual financial circumstances, incentives and deals available at a particular point in time.Leave a comment:
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Interesting...
I don't know anything about prepaid lease.
But I do know that leasing you get lower electric rate for 25 years, but you don't reap the full benefits of saving ALL from the solar is generating. I would digress and say owning is the way to go, take out a HELOC or Home Improvement loan then you're actually putting an investment in your solar and the full benefits...Leave a comment:
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I think the pre-paid lease is the way to go. Not of a fan of the zero down/power purchase agreements. Pre-pay seems to have all the benefit of the purchase combined with all the benefit of the lease. You get the immediate federal tax discount, no waiting for a refund. Without having any of the inflated interest rates and power rate escalators.
The leasing company gets to write off the deprecation of the equipment, something you can't do with a purchase. This is probably the single biggest reason to lease. This is basically another tax subsidy equal to 20% of the value of the lease. The leasing company can share some portion of that with. I found it pays to shop around on the leases, large differences in the pre-paid pricing.
I also found all the big lease companies you needed to ask "do you have any special promotions" that would inevitably knock $500-$1000 off the price. The smaller local installers didn't play that game. Some of the lease folks seem a little used-car salesman-ish
I ended up going with sungevity, I can give you the name of the person I worked with there, she was really upfront. The pre-paid lease option I got was $15k for 7.0kW system, I would expect the CA pricing to me different the MA pricing. The best purchase price I could find was $18,500. I would price out 2 or 3 purchases and 2 or 3 pre-paid leases see what makes sense. In California over 60% of the solar installs are on lease agreements. The depreciation benefit is huge, you just need to make sure the leasing company is sharing some of that benefit with you...
PeterLeave a comment:
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Contact Sunpower
Their financing terms are good in MA.
Actually beat some leases and you are getting top quality and service.Leave a comment:
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I'm in the same boat, but here's what I learned.
Lease is cheap/free but that's because the leassor company is earning money of SRECs.
State Incentive is 10% up to $4k. What size system are you looking at?
I have a family member who adopted solar over 20 years ago with an 800 Watt system tied to batteries. His solar panels, much older technology mind you have barely (like less than 5%, less than noticeable) degraded. His batteries he had to replace once. Not sure about the inverter, will have to get back to them on that.
But basically, MA has the SHORTEST payback time if you invest in solar. Average is 4.5 years, I think mine with the cheapest panels and 81% TSRF (that's the measurement of how much sun you can get on your panels year round, 100% means no shade no obstruction) was about 4.7 years.
Now my boat involves so many choices of panels and a limited amount of space. I can go 3.6kw for cheap panels or 5kw for 11k more. Not sure what to do :P BTW, using Solarize Mass as an advantage...Leave a comment:
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getting Solar evaluated...need some guidance
I'm a total solar noob in MA and I got evaluated by Sungevity a while back, but couldn't pursue it b/c I needed a roof. I didn't much care for the whole "solar lease" thing either....seemed kinda shady. I got my new roof a few months ago and I'm getting evaluated again by "Next Step living" here in MA. He said my house was facing South and "perfect" for solar. He's coming back in a couple weeks to measure the roof, take readings, etc. He said once that's done, he can give me exact numbers: how much I'll generate, how much the system will cost, how much I'll save over time, etc. My wife is skeptical and thinks he's stringing us along. How do I know for sure? Everything seems like it makes sense, although the numbers are totally vague at this point. net-net seems to be this: cost of new system - 30% fed incentive, $3k or whatever State incentive - utility incentive = $$big savings$$ compared to current electric bill. Now the amount of savings it takes to out-weigh the aesthetic drawback of having all the gear on our new roof is much less than my wife. Basically, there doesn't seem to be much non-biased info out there to help with whether I should continue pursuing this or not. For anyone who's familiar with the MA incentives, purely financially, is all this worth it?
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