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Solar Panel Lease
Posted on 12/12/14 at 4:37 pm
Posted on 12/12/14 at 4:37 pm
We walked a FSBO house the other day that has solar panels - but they are leased. Apparently it is a 15 year lease at $45/month. The homewoners say the year over year savings on their Electric bill averaged about $85/month, so net savings of about $40/month. The system is 2 years old.
Apparently if you sell the house, the lease transfers over to the buyer, but I'm not sure of the mechanics of this. I guess the lease is assignable and would be part of the purchase agreement?
I've done some research online and I've found a few articles that basically call into question the finances of a lease, especially in LA where the tax credits are 80 percent.
It looks like if I were to buy a new comparable system today after tax credits it would cost me around 5K. The PV of 13 more years of lease payments is about $4,800 - but I now have a system that is 2 years old.
What else should I be thinking about here? Does the monthly lease payment cover maintenance and repairs as well?
Apparently if you sell the house, the lease transfers over to the buyer, but I'm not sure of the mechanics of this. I guess the lease is assignable and would be part of the purchase agreement?
I've done some research online and I've found a few articles that basically call into question the finances of a lease, especially in LA where the tax credits are 80 percent.
It looks like if I were to buy a new comparable system today after tax credits it would cost me around 5K. The PV of 13 more years of lease payments is about $4,800 - but I now have a system that is 2 years old.
What else should I be thinking about here? Does the monthly lease payment cover maintenance and repairs as well?
4
Posted on 12/12/14 at 4:52 pm to LSUFanHouston
Effectiveness of the panels decreases by about 2% per year as well
Posted on 12/12/14 at 5:36 pm to LSUFanHouston
quote:
Apparently if you sell the house, the lease transfers over to the buyer, but I'm not sure of the mechanics of this. I guess the lease is assignable and would be part of the purchase agreement?
Correct
quote:
I've done some research online and I've found a few articles that basically call into question the finances of a lease, especially in LA where the tax credits are 80 percent.
It looks like if I were to buy a new comparable system today after tax credits it would cost me around 5K. The PV of 13 more years of lease payments is about $4,800 - but I now have a system that is 2 years old.
As we know, it is better to buy than to lease. Some people lease because they have no tax liability and so the tax credits don't help them. Some people lease because they can't get financing to buy the system, but can qualify for a lease.
In your case, it is already done and if you choose to buy the house, you're getting a system already installed. Not a bad deal for $45/month. Find out what type of panels and inverters and I can give you some more info. 2 years old is not old at all. As long as it's not some shitty Chinese made panels, you will have a 25 year warranty on your panels. You should have 25 on your inverters as well.
Posted on 12/12/14 at 5:38 pm to tigeraddict
quote:
Effectiveness of the panels decreases by about 2% per year as well
Where did you get this info? You're wrong, but I'd like to know.
OP, a good panel will decrease by about .05-.07% a year. Some, like Mitsubishi and Sun Power will degrade even less than that.
Posted on 12/13/14 at 6:11 am to Sho Nuff
Another wrinkle to consider: many homeowners policies. Won't cover the solar panels without a special rider.....if your house is deemed to be in one of the higher risk wind zone areas closer to the coast.
Posted on 12/13/14 at 10:07 pm to LSUFanHouston
What happens when the lease is up?
Posted on 12/14/14 at 11:10 am to LSUFanHouston
quote:
What else should I be thinking about here? Does the monthly lease payment cover maintenance and repairs as well?
Are you in a regulated area (assuming you may not be if you are still in Texas)? And if so, who is the utility?
Most regulated utilities don't have different cost structures built in for solar vs. non-solar customers. In other words, there could be recovery mechanisms built into your bill in the future which would effectively increase your bill that would cut into those savings. It's difficult to explain the math involved and utility billing structure, but solar users effectively use the grid as a "free battery," by selling excess power back to the grid at non peak times, and just receiving a credit for that power they use at peak times. Essentially solar customers (for the most part) don't provide any relief on the fixed charges of the grid, because they still need to draw power at peak times, so the grid is still responsible for providing them that power. Currently, some of those fixed charges are possibly in a variable bill component. So it is possible that the utilities will carve that portion out and create a new billing component for solar customers, to more accurately reflect cost causation.
If I were to get solar, there is no question it would be a purchase, as the leasing companies receive the credit, and you are locked into that technology.
Posted on 12/15/14 at 12:47 pm to Sho Nuff
You seem like you know your stuff here... do you install them?
I know the provider was Joule Energy. I've asked the seller to provide me with whatever documentation they have regarding the panels and the lease, and I plan on calling Joule Energy to confirm the process of the transfer. Once I get specific information on the equipment I will report back.
I know the provider was Joule Energy. I've asked the seller to provide me with whatever documentation they have regarding the panels and the lease, and I plan on calling Joule Energy to confirm the process of the transfer. Once I get specific information on the equipment I will report back.
Posted on 12/15/14 at 12:47 pm to hungryone
Thanks, the house is in Meraux, in St. Bernard Parish, so I will definitely ask my insurance agent about it.
Posted on 12/15/14 at 12:53 pm to OceanMan
quote:
Are you in a regulated area (assuming you may not be if you are still in Texas)? And if so, who is the utility?
The house is actually in Meraux, LA, in St Bernard Parish (we moved back from Houston 3 years ago - too lazy to change name) so it is Entergy Louisiana. From what I've read - and need to confirm - Entergy charges a minimum fee per month - sort of like a fixed cost - and then charges for the net power used (power drawn from Entergy less power supplied back to Entergy). I did read something on their website that indicated the LA Public Service Commission has told them that once they get to so many solar customers, they can stop accepting net metering.
If I were given a choice, I'd buy them as well instead of leasing them. But even if I buy out the contract, the credits are gone, so a buy out makes no sense. And I get the impression from the sellers that they are not willing/not able to pay to cancel the contract and have the panels removed, so, basically us forcing them to do so would be a deal killer.
We really like the house, so we are just trying to see if this lease is something that should cause us to walk. We don't like the house so much that we're not willing to walk if needed, but if everything is ok with the lease, I think I would be willing to go along. Just trying to do my due diligence!
Posted on 12/15/14 at 3:40 pm to LSUFanHouston
quote:
We really like the house, so we are just trying to see if this lease is something that should cause us to walk.
From what you have said so far, no reason to walk. I am a Project Developer, so yes I know a lot about PV.
If anything, and if the roof has the room, I might look into adding another system that you do purchase. $40 a month savings isn't bad but if you're still paying an electric bill above the $45 you have to pay the leasing company, another system could be good. LA had the best state tax credit in the country before 2014, I don't know if they still do? It was 50%. I think it dropped to 38% +/-, right? The Fed credit is 30% and that is set to go back to 10% at the end of 2016.
Posted on 12/15/14 at 3:52 pm to Sho Nuff
quote:
Where did you get this info? You're wrong, but I'd like to know.
this is about 5 years ago when i set in during a sales pitch to my parents. looked it up they say less then 3% the first year, and .5% each after that
not sure if my info was just old or if the sales person didnt know what they were talking about
Posted on 12/15/14 at 3:57 pm to Sho Nuff
Leased systems are now subject to the 38 percent amount and lower project cost limits. For now, purchased systems aren't changed.
But, now, LA has a max of 1 system for which they will pay a LA credit, per residence.
So I think the fact that a credit has already been applied to the house (via the leased system) means I won't be able to get LA credit on this house on this system. I could get a federal credit on an additional system.
The electric company lobbyists have been hard at work cutting down the credits!
But, now, LA has a max of 1 system for which they will pay a LA credit, per residence.
So I think the fact that a credit has already been applied to the house (via the leased system) means I won't be able to get LA credit on this house on this system. I could get a federal credit on an additional system.
The electric company lobbyists have been hard at work cutting down the credits!
Posted on 12/15/14 at 7:01 pm to tigeraddict
quote:
not sure if my info was just old
That could be possible, but that seems high.
quote:
or if the sales person didnt know what they were talking about
More likely
Posted on 12/15/14 at 7:05 pm to LSUFanHouston
quote:
But, now, LA has a max of 1 system for which they will pay a LA credit, per residence.
The credit stays with the residence and not the taxpayer? That seems pretty strange being that you did not claim the taxes nor were the homeowner when the system was leased. Check in with a CPA or good accountant to make sure. You should be able to get the tax credits if you buy a new system.
quote:
I could get a federal credit on an additional system.
Yes, at minimum, you can get 30% from Fed. But the extra credit from the state is huge.
quote:
The electric company lobbyists have been hard at work cutting down the credits!
NextEra just bought HECO (Hawaiian Electric) and they are from Florida where basically nobody has rooftop solar and NextEra doesn't think it makes financial sense. The sale has to be approved and there will be lots of bitching to the PUC here. In Hawaii the average ROI is 3-4 years, it's awesome.
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