Solar Leasing: Smart Choice or Wasted Investment?

Leasing Solar Panels

Leased solar, commonly known as third-party owned solar, has earned attention as an alternative to purchasing. Despite historically low solar panel costs, the cost of installing a PV system still leads some homeowners to consider leasing solar panels instead of owning them. But leasing solar panels isn’t always a smart option.

One thing for sure is the stock market loves it when you take on a solar lease just as much as when you lease a car, or any other large piece of equipment, especially in such an incentivized state as California, yet that state leads the percentages in leases for that very reason.

The leasing companies take all the advantage of the incentives, putting that money into their pockets immediately, paying for the equipment outright and banking on a 10–20 year lease payment from the homeowner. Still, many homeowners are curious about the differences between leasing a home solar system and buying one outright. There are advantages and disadvantages to either method, but before I sound too judgemental, let’s look at how leases work and the pros and cons of leasing vs. owning.

First of All, How Does Solar Panel Leasing Work?

How Solar Leasing Works - Solar Panels For Your Home - Backwoods Solar
How Solar Leasing Works

When homeowners lease solar panels for home systems, they actually buy electricity from a company who owns the solar panels installed on their roof. The price a lessee pays may be significantly lower or the same to what the utility company would charge for electricity.

The homeowners can sometimes lock in this rate over the term of the lease, or see their lease payment increase at a slightly lower percentage year over year to what the TPO “thinks” the utility rates will do. These are called escalation and de-escalation clauses.

Some companies like Sungevity and SunRun are third-party financiers, and they don’t actually install the solar system. Instead, they contract with local contractors to have the panels installed onto the roof. Others are companies like SolarCity, actually handle both the financing and installation.

In both these cases, we have found that the installer has a lower vested interest in doing the job well and are more interested in the total volume of installs they can do as the leasing companies pay a significantly lower price per watt for the labor than what an installer can charge if they were do a system with that homeowner directly.

Solar leasing terms vary considerably, and they usually allow homeowners to start their solar leasing program with no money down. Leasing contracts are available in increments of twenty, fifteen or ten years, where homeowners are given the option to buy the system, if not, fully own the system outright at the end of the lease.

Many of these companies continue to offer ongoing maintenance of the system, however, with the solar panels, aside from warranty issues with the product themselves, maintenance is pretty low. With leasing in its infancy and most warranties on inverters being around 5-10 years (the shortest warranty period of any of the equipment), we have yet to see how the maintenance contracts will play out. In the case of roof leaks, many of these companies have clauses that exclude roof damage as part of their contract, especially on a roof that is pre-existing and not being re-roofed at the time of install.

Which States Can Homeowners Find Solar Panel Leasing Programs?

States with Leasing Programs - Solar Panels For Your Home - Backwoods Solar
States with Solar Panel Leasing Programs

Solar leasing contracts can be found in 13 states: Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Oregon and Texas. It’s also available in Washington, D.C.

Homeowners need to know that solar leasing, coincidentally, is only available in locations in these areas that offer measurable state, local or utility rebates. In California, for example, TPO systems account for 74% of residential solar installations state wide. Some reports project third-party ownership of solar installations could make up 83% of solar capacity in the United States by next year. Huge boom…2016 ending credits…

PROS of Leasing Solar Panels For Your Home (with contradictory opinion added)

Four Reasons Why Leasing Companies Want You to Consider a Solar Lease:

Leasing doesn’t come with the same upfront costs that buying does. Most homeowners who consider solar installation are worried about the up front costs. Although terms vary based on one’s credit rating, local or state incentives and the solar capacity of one’s home, solar leasing usually allows people to go solar without putting any money down.

This is one way for consumers to access solar energy who otherwise wouldn’t be able to put down the investment capital. And since fewer American homeowners have equity now than in the past, home equity loans that were once easy to obtain aren’t always available to finance solar installations.

Leasing doesn’t come with maintenance costs. When something malfunctions, lessees tied into a lease aren’t responsible. Repairs, maintenance and replacement are the responsibility of the solar leasing company. For example, if a panel under performs on delivering adequate power supply, or an inverter fails, or comes up for end of life replacement after ten years; it’s the solar lessor who promises and pays under warranty.

Considering this costs a few thousand dollars, leasing can provide the financial peace of mind free from maintenance and uncertainty. However, as I mentioned previously, we have yet to see the maintenance clauses play out with many leasing companies. Also, all installers of purchased systems and those components carry the same coverage and warranty’s and a simple call to the manufacturer can get replacement equipment on it’s way, and most reputable installers include the labor to replace failed equipment as part of their contract.

Solar Leasing Savings Graph - Solar Panels For Your Home - Backwoods Solar
Electric Bill Savings With Solar

Leasing may cost less for energy verses the utility company. Some leases allow consumers to lock in static pricing on electricity rates for a decade or longer. But again, this is a gamble. Leasing allows you some choice in how you design your lease terms.

Some leasing products allow you to choose how much money you want to put down toward the lease, as well as the escalation rate but these figures may not come to fruition over the terms of the lease and are based on where the leasing company projects that the energy rates will escalate over time.

CONS to Leased Solar Panels For Home Systems

As mentioned earlier, when you lease solar panels, you surrender many of the advantages that come with buying solar panels. Instead of enjoying solar tax credits and rebates, those benefits will go to the owner of the solar installation, or the leasing company, so will the rights to earn and sell renewable energy credits.

One of the primary advantages of solar power is independence from the utility company. By installing rooftop or ground-mounted PV arrays, homeowners are able to generate their own electricity even selling electricity back to the utility company, in some cases. Leasing solar panels creates another binding monthly payment for homeowners.

A typical 5kw system begins paying for itself immediately. In California, a 5kw solar installation can pay for itself in as little as 5 years through lower electricity bills, rebates & incentives, tax breaks, and other cost recovery methods.

For homeowners who can make the financial investment up front, the ROI of installing solar panels is pretty clear.

Five Reasons to Opt for Outright Purchase of Solar Panels

Buying can be a better economic bet in most states. Solar leasing companies are in business to turn a profit from the leases they sell. They pocket the rebates and incentives, and use escalation and de-escalation options in order to better hone the leasing instrument into a financially rewarding investment for themselves. The longer the lease agreement, the more they profit, and the less economic sense it may make for the consumer.

Solar leases aren’t a poorly crafted or unscrupulous device by themselves and if used correctly. The key to staying ahead of the potentially negative consequence of a solar lease is to assess your situation with a level financial analysis. For the cost of a $250 feasibility study, you can hire an energy consultant-solar broker to help you compare the pros and the cons relative to your unique situation. Have them perform the lease verses purchase test and then decide.

Buying panels provides flexibility. Lease contracts might specify a certain installation size, but when owners purchase their own system, they aren’t bound by details of equipment or power production. Which is really beneficial locally, with tiered billing. A lot of times a homeowner can design a system to knock out the over baseline usage, which maximizes return on investment and minimizes the size of the system.

Leasing solar panels creates debt. When you purchase a solar system, you’re adding value to your home. A leased solar panel system, on the other hand, creates a debt liability that may need to be passed on to a homebuyer.

A solar purchase may add value to a pre-existing home. Homeowners who are going to move in the next few years probably shouldn’t consider buying or leasing a solar panel installation. However, if consumers sell their home after they’ve benefited from the installation after several years, the money that they’ve invested may allow them to raise the asking price and compete more effectively against those home sellers who do not have a solar installation.

It might be easier to sell your home without a lease. In a real estate market that is already weak for home sellers, leasing solar panels creates another obstacle to a home sale, and in some cases, the new homeowner may have to pay a hefty fine to break the lease agreement you entered into with your solar provider.

According to some real estate professionals, solar leases may present a potential slowdown or a threat to the sale of a home. Some home buyers may not want to deal with taking over an existing lease. They may have other ideas for how they want to shop for solar, or they may not have the credit to qualify to take over a solar lease within the same terms.

The leasing company becomes another entity that you have to negotiate with during the purchase of the home, and they have the power to alter or increase the lease payment, lengthen the term, etc at the time that ownership changes.

Some solar leases will not let you pay down or pay off your system early. With more leasing options becoming available, it is wise to check out the terms and conditions. Some have reportedly 20 year contracts, while others let you pre-pay or pay off the system in 7 years.

To Buy or Not to Buy

There are some contradictions between owning verses leasing. In the end it comes down to what each individual consumer deems valuable to himself, both financial and intrinsic. Some consumers want to emancipate from the grid for environmental reasons, no matter the cost, and within reason. Others have skyrocketing electricity bills with no end in sight, where a lease may be the only access point short of outright purchase, to which funds may not be readily available.

Many rebates are available and most companies will opening share those in your local area. Visit dsireusa.org for updated information on how you can save money on your owned installation.

Considering the short amount of time that solar leasing companies have been in existence and the business models that are employed, it will be in everyone’s best interest to read the fine print of a solar lease, and also do background research on the company providing the system to you.

In either case, whether you buy or lease, check the installation records of the company that you hire. Many leasing companies use local installers, check their references and the number of years that they have been doing installs to make sure that the work they are doing on one of your greatest investments; your home, is going to stand the test of time or at least hold up for 25 years.

If you’re interested in buying solar panels for your home, we’d be happy to help you customize the right system for your home and needs. Contact us today to get started on your solar project.

Ref: Online sources for data

Have Solar, Will Travel

All Women's Horse Packing Adventure in Argentina - Off-Grid Power - Backwoods Solar
All Women’s Horse Packing Adventure in Argentina

-By Krista Miller

I have an iPhone. I’m not sure how that happened but I digress. This story is about being prepared whilst traveling with one.

On a whim I decided to join up on an all-woman’s-horse-packing-adventure in a very remote part of western Argentina. I’ve never traveled alone before and this seemed like the perfect chance for me to prove to myself that I could do it. But first I had to make sure I packed smart and light.

I wasn’t allowed in the Boy Scouts when I was growing up but I really identified and still do with their motto “Be Prepared”. I was raised off-grid and know what it means to be self-sustaining. So, my co-workers at Backwoods Solar suggested that I take the Sunjack mobile solar charger and test it out on my trip, I jumped at the chance.

Let me get back to that iPhone again and say that in a previous life I would have left it behind on a trip like this. I mean, I was going to “un-plug”, not to worry about devices and international payment plans. There were two things which happened in succession that lead to my enthusiasm in packing the Sunjack with my iPhone.

One, people insisted I take photos (great camera on that thing). Two, my parents and my husband were worried sick about me traveling alone. So, into my luggage it went and, because I’m a “boy scout”, I winced at the extra weight (1 lb 15.6 oz).

Tack Barn at Estancia Ranquilco - Off-Grid Power - Backwoods Solar
Tack Barn at Estancia Ranquilco

After a five hour drive south to San Francisco, a flight to Dallas, an overnight flight to Buenos Aires, an overnight bus to Zapala, a three hour 4 x 4 drive to the meet-up place, and a three hour horse-back ride, I made it to my destination, Estancia Ranquilco. And wouldn’t you know it, my phone was dead.

That next morning, as I waited for fresh milk from the cow, I hung the Sunjack by its handy carabineer to a metal chair leg that I perched on the main lodge’s veranda ledge overlooking the river facing the eastern sunrise. Just doing that made me feel, well you know, resourceful like Macgyver. I sat back enjoying some Mate as the morning sunshine illuminated the day and charged the Sunjack’s  8,000mAh lithium-polymer battery. After that it would be ready to charge my phone via the 5V/2A USB port.

With my sleeping bag and extra clothes packed on the mules, I was left to pack my saddle bags with just the essentials.  My horse Sultan carried me, the Sunjack, my phone/camera, a wool poncho, snacks, and water. The seven of us headed off into the foothills of the Andes, snapping pictures, and getting to know our horses.

Sultan doesn't mind the Sunjack on his back - Off Grid Power Systems - Backwoods Solar
Sultan doesn’t mind the Sunjack on his back.
Attached and charging - Off-Grid Power - Backwoods Solar
Attached and charging.

When I noticed my phone getting low on juice then I would secure the Sunjack behind my saddle to charge it up again. One of the other women on the trip needed her phone charged at some point and I was more than happy to do that for her (the battery holds enough charge to power up to four smartphones!). It was so cool to be able to continue our tools to function out in the middle of nowhere.

Traveling on my own gave me the confidence to continue seeking adventures like this. I think I was able to be prepared and not feel weighed down by too many devices. I had just what I needed to make myself feel safe. If I needed to I could communicate to my parents, my husband, my friends, and take lots of pictures-all thanks to the power of the sun. Have solar, will travel!

 

Krista is happily planning her next solo adventure while she fulfills her duties as Executive Assistant at Backwoods Solar. She obviously recommends the Sunjack for all Boy Scouts.

AEE Solar Dealer Conference 2015

Balboa Part- San Diego - Solar Panel Kits - Backwoods Solar
AEE Dealer Conference held this year in sunny San Diego

Backwoods Solar’s Co-Owner, Sequoya Cross, was fortunate this year to be able to attend the AEE Solar Dealer Conference in San Diego. Held almost every year this conference is a chance for those in the industry to sharpen their knowledge and network with others.  Over the course of three days Sequoya met with a variety of the Backwoods Solar vendors, learned about upcoming new product changes and innovations, watched demonstrations, and sat in on a three hour course on 2014 National Electrical Code (NEC) changes that will affect the solar industry.

If you were not able to attend here are some of the highlights. From REC Group, and manufactured in Singapore, comes the new Twin Peak 120 cell module. The Twin Peak includes typical solar cells which have been cut in half and then wired into two parallel 60 cell groups within one frame to increase the power density of the modules. This seemed like an interesting and new take on efficiency gain.

Morningstar's Solar Module - Backwoods Solar
Inside look at Morningstar’s Latest and Greatest!

Morningstar spent some time chatting with Sequoya about their soon to be released 600V charge controller and DC Coupling enclosure. Join us when we will be co-hosting a webinar with Morningstar on March 25th 10am PST. We would love to share this information with our customers. If you are interested in learning what Sequoya found out in regards to DC coupling….register here .

Conference attendees were treated early one morning to an excursion out on the Marina to see a demo hosted by Brian Teitelbaum of AEE Solar. Brian demonstrated the features of the Aquatech DC Direct Pump. The crowd, which mostly deals with grid-connected homes, was full of questions about the wonders of DC Direct applications. Brian did a wonderful job of showing the simplicity and efficiency of such a system, even in the low morning light not to mention a great opportunity to stress the importance of module tilt angle.

How Solar Direct Water Pumping Works - Backwoods Solar
Brian shows the crowd how solar direct water pumping works.

 

Later that same morning, and after many cups of coffee, Sequoya managed to hang in for a few hours of discussion with Bill Brooks on the recent changes in the NEC Code that will directly affect the solar industry and those that will not. Here is a quick link to chew on some of that code:  http://www.nfpa.org/codes-and-standards/free-access. It was an interesting take on the very important yet dry language content. As always Bill had a way of livening it up. Thank you to AEE and participating vendors for an informative and engaging dealer conference in beautiful San Diego. Backwoods Solar looks

2014 NEC Code - Solar Panels - Backwoods Solar
Bill Brooks and the 2014 NEC Code

forward to the next one!

 

Off-Grid Battery Care and Maintenance

Battery care is your main responsibility with home made electricity. This component is the one part of your power system likely to be harmed by neglect or misuse. Lead-acid batteries, the standard in home energy, should not be discharged more than 50%. Ideally, they should be recharged to 100% promptly. They can be damaged by undercharging, continued overcharging, or contamination.

Common causes of battery failure are sulfate buildup, loss of electrolyte, undercharging, and old age. As batteries discharge, lead sulfate forms on a battery’s positive plate. In principle, recharging converts the lead sulfate back to its component material – lead, lead dioxide, and sulfuric acid. However as batteries age, recharging has a more difficult time converting lead sulfate and it can crystallize. This buildup is accelerated by temperatures over 70 degrees; discharging a 2 volt battery cell below 1.75 volts; and extended storage or use without a 100% recharge.

Water Miser Battery Cap - Off-Grid Power - Backwoods Solar
Water Miser Battery Cap

Loss of water within the electrolyte solution is a natural process which occurs during the recharging process and if not corrected can lead to plate exposure and oxidation. Repeated undercharging causes lead sulfate to harden and crystallize on the positive plates. And as batteries age, plate material sheds and falls to the bottom of the battery eventually shorting the plates. This shedding is accelerated by sulfate buildup.

Trimetric Battery Monitor Kit - Solar Panel kits - Backwoods Solar
Trimetric Battery Monitor Kit

On a daily basis, Backwoods Solar discusses the state of charge of a battery bank with our customers. On many occasions we hear that a battery meter such as the Trimetric Battery Monitor indicates a battery bank is almost full but loads on that bank are behaving as though the battery state of charge is low. We ask if the Trimetric’s reading has been confirmed with an hydrometer which measures the specific gravity of the battery’s electrolyte, and almost universally it has not. This mistake can have an irreversible and negative affect on a battery bank if not detected within a few short weeks.

Please realize that these meters are only as good as the programming which gets entered into them and it is critical that an hydrometer is used in conjunction with a Trimetric meter for the first several months to confirm that the Trimetric is accurately programmed. As the Trimetric and hydrometer readings are compared, the Trimetric’s parameters can be tweaked to insure that what it is telling you is reliable. The Trimetric is a great visual aid and once programmed properly can be relied on for weeks at a time but you should always return to the hydrometer every few months to guarantee that something hasn’t gone wrong.

The vast majority of the batteries that Backwoods Solar sells are the Trojan flooded lead acid batteries. Trojan has some informative and extremely helpful articles and webinars on their website when it comes to battery care. We also carry a full line of Deka and Rolls Surrette Flooded and sealed batteries.

Trojan L-16 Flooded Battery - Solar Panels - Backwoods Solar
Trojan L-16 Flooded Battery
Rolls/Surrette S530 - Solar Panels - Backwoods Solar
Rolls/Surrette S530
Deka L16 Battery - Solar Panels - Backwoods Solar
Deka L16 Battery

 

REMEMBER: Do not store batteries without periodic recharging. Continual self discharge when not in use can ruin even a brand new set of batteries.

To facilitate the care of your battery bank, Backwoods Solar carries many products designed to extend the lift of your battery and to aid in battery maintenance. You can find many of these items on our website, along with helpful tools on how to maintain your battery bank.

Battery Life-Saver - Off-Grid Power - Backwoods Solar
Battery Life-Saver
Battery Goop - Off-Grid Power - Backwoods Solar
Battery Goop
HydroVolt Meter - Solar Panels for Home - Backwoods Solar
HydroVolt Meter

 

Humanitiarian Outreach and International Projects

HAITI

Fuel to run generators became scarce and expensive after the Haitian earthquake. Many of the schools and clinics did not have proper lighting. Sun Energy Power International (SEPI) and Solar Energy International (SEI) reached out to companies in the solar field for help. Answering that call were  Backwoods Solar Electric Systems and Alternative Energy Engineering with donations of solar modules. Morningstar donated charge controllers, and Ed Eaton of Our Sun Solar built and donated LED lights. Most of the systems went to 15 physicians who had taken a training course the year before. Some went into schools where people slept and others went to Doctors without Borders.

BURMA & THAILAND

Backwoods Solar Electric Systems worked in conjunction with SEI to design and supply product at a discount to Border Green Energy Team who educate and install solar systems in Burma and Thailand. These systems serve thousands of people within the community who rely on clinics that need power for lighting nighttime surgery, vaccine refrigerators, medical devices, etc.

NIGERIA

In Nigeria, Backwoods Solar worked with NIGCOMSAT & Project Engineering to design solar powered systems for the numerous Community Telecenters in the country. These systems have been installed both in urban and rural areas. The systems use Outback Flexware 500 power panels, and roof mounted Kyocera modules. The telecenters provide broadband service, have laptops, servers, and communications equipment that the communities can use. The solar energy system powers all of the equipment and lighting needed for the communities to be successful in their goals. We are currently providing quotes and system design ideas for an additional 1500 systems.

DEMOCRATIC REPUBLIC OF CONGO

This project was installed in the Democratic Republic of Congo, and one that we were very excited about. Backwoods worked with a satellite telecom company to provide solar power to 220 remote towers. We reviewed the specifications with the client and designed each system to provide continual solar power using two Yingli modules, MPPT charge controllers, and Deka batteries. These telecom towers were installed in remote areas of the DRC in an effort to have people who have not had the chance to vote, vote for the first time in the upcoming presidential election. After the election the systems continued to provide telecommunications service from village to village. We have been asked to provide an additional 4,500 systems to help expand the communication infrastructure in the future.