About Solar Leasing And Financing
Leasing of a solar system afterall may be not such a good idea. Enticed by immediate savings, a lessee puts himself
into a long time "debt bondage". An outcome of such "debt bondage" in 15-20 years is very uncertain and therefore
Lets model a possible situation when by a lease mid-term (in 10-13 years from now) installation of a newer and much more efficient system would cost less than the total of remaining obligation under the current lease. In numbers, a $200/month lease would cost from $24,000 to $28,800 to end 10-12 years earlier. By that time a value of this leased system might be close to zero while the property owner would still be in a big debt for it. The assumed numbers seem quite real, so the risk is real as well. Lets assume further that by the lease mid-term (10 - 12 years), the property owner would have had saved 24 - 28 thousand dollars (too optimistic, but let's see..). Then he would be lucky to break even paying off the remaining lease at that time.
The only real beneficiary in such cituation is the lesser as this lease is a security for him but not for the lessee. For a lessee, a long term leasing of a solar system is rather a BIG TIME LIABILITY. As solar leasing has been on the market for not so long, in a few years we are likely to see an increasing number of lawsuits, buncrupcies, and foreclosures resulted from solar leases. See this: http://www.phoenixnewtimes.com/news/leased-rooftop-solar-no-longer-a-good-deal-in-arizona-says-tech-site-6628138
Bank financing of a solar system is somewhat different. It is more like partnering the bank in your investment project. You split risks and share profits. Bank lends you money to invest in your solar system and you pay bank back from your savings from electrical bill (your profit). In numbers it looks like if you have invested $30,000 in your solar system at estimated return rate of 12% (see Case Study), your average annual profit (savings) would be around $3,500 (in today's dollars). If you borrowed this money from a bank for 10 years at 5-6% APR, bank would be taking a bigger part of your savings during these years still leaving some to you, so at least you'd be making something on your system.
After the bank is paid off, you'd enjoy the full benefit of your own solar system. Your benefits could improve, should you apply your federal and state incentives (currently, 30%+ of system cost) towards the bank loan repayments. See this: http://cleantechnica.com/2014/02/09/solar-leasing-vs-0-solar-loan-scenarios-10-states/
The above estimates are simplistic and rough, but provide directions for considerations of different options to finance a solar system. Leasing appears to be for people who are desperate to make or save some money without any upfront capital expendutere. In professional terms, these paople hope for a reward without taking a risk. Can it be real? Think it over.
If you have cash sitting in a bank or securities yielding 1-2% in interest annually, you probably could not be better off by investing this money in your solar system. If your money is not enough, then taking a bank loan to finance a part of or the system can be feasible provided that the money is spent in an efficient manner.
To help with your decision, leasing vs. buying, you can call us at (480) 296-0223, and we will prepare a free professional economic analysis to better evaluate your options.