Solar Leases are Bad for PSEG LI Customers
Solar leasing might be here to stay, but it is bad idea for Long Island customers, for many reasons. Leasing is a POOR financial decision when you can save over a thousand dollars annually with a PURCHASED solar array.
When you stack everything up, you’ll find that the leasing company benefits greatly, while you as a consumer benefit minimally from a solar leasing contract. Here’s a link to a brief article about Solar City that appeared in Newsday on February 19, 2014.
Don’t surrender your benefits to the bankers and brokers!
The solar lease concept is brought to you by the same people who dreamed up the sub-prime mortgage. These investment bankers and Wall Street brokers have found a way to finance solar for you, but to take all the benefits that should have been yours out of the equation.
Leasing companies such as Solar City, Vinit and Roof Diagnostics take the federal tax credits. They depreciate the system, taking even more tax credits, and they help themselves to the largest portion of what should have been YOUR energy savings. No wonder they want you to let them use your roof!
Do The Math - If You Lease, You Lose!
The following example represents two identical PV systems. One is a purchased system, one is a “PPA” Power Purchase Agreement with a leasing company. This scenario assumes that both systems are efficiently designed to offset the clients 8268kwh electric consumption.
If you lease this system, it will cost you $17,002.82 more over 20 years. Why pay $26,000+ when you can own it outright for $9,000?
A Purchased 6360 Watt System @ $3.15/Watt
|Description||Purchased Solar System*|
|6,360 watt system @ $3.15/watt||$ 20,000|
|30% federal tax credit||- 6,000|
|25% state tax credit||- 5,000|
|FINAL COST||$ 9,000|
Because the customer purchased a PV system to meet all of their electrical needs, they will not see any rise in electrical costs from utility rate increases.
A 20 Year 6360 Watt Leased System
|Year||Payment Amount||Total Payments|
|1||$ 1,157.52 (1.03)||$ 1,157.52|
|2||$ 1,192.24||$ 2,349.76|
|3||$ 1,228.01||$ 3,477.77|
|4||$ 1,264.85||$ 4,742.62|
|5||$ 1,302.79||$ 6,045.41|
|6||$ 1,341.87||$ 7,387.28|
|7||$ 1,382.12||$ 8,769.40|
|8||$ 1,423.58||$ 10,192.98|
|9||$ 1,466.28||$ 11,659.24|
|10||$ 1,510.26||$ 13,169.51|
|11||$ 1,556.56||$ 14,226.07|
|12||$ 1,602.22||$ 16,382.29|
|13||$ 1,650.28||$ 17,978.57|
|14||$ 1,699.78||$ 19,678.35|
|15||$ 1,750.77||$ 21,429.12|
|16||$ 1,803.29||$ 23,232.41|
|17||$ 1,857.34||$ 25,089.75|
|18||$ 1,913.06||$ 27,002.81|
|19||$ 1,990.45||$ 28,993.26|
|20||$ 2,029.56||$ 31,002.82|
|NYS Tax Credit||- 5,000.00|
|Total payments after 20 years, minus NYS tax credit.||$26,002.82|
Additional Consequences When You Sell Your Home
When you sell your home with a purchased PV system, it becomes an asset. A purchased system is income producing and yours to sell. It increases the value of your home because the buyer will be purchasing a house that produces its own electricity.
When you sell your home with a “leased” system, the PV system instead becomes an encumbrance. The leasing company will have a lien on your home. They will expect payment for the remaining years of lease payments and will be waiting for you at closing. You can try to transfer the lease to the new owner if their credit is good, but many people are not foolish enough to assume such a contract when the 3% escalation rate may outpace the cost of electricity through the utility company!
Buying Versus Leasing a Solar System
|Description||A Purchased Solar System*||A Leased Solar System*|
|30% Federal Tax Credit||YES||NO|
|25% NY State Tax Credit ($5,000 max)||YES||NO|
|Valuable Home Improvement||YES||NO|
|Home Selling Benefit||YES||NO|
|Solar System Maintenance||NO||NO|
The purchased system will give you savings on your electrical bill every month. It is protected against cost increases because you own all of the electricity the system produces and you will use net metering to offset your electric bill. If the utility rate changes, the value of your solar electricity changes with it.
The “leased” system will save you a portion of your electric bill because your are purchasing the electricity from “your” solar panels every month. You may save 15 or 20% on your electrical costs at the beginning of the agreement, but the escalation in PPA costs will quickly outpace your electrical savings, causing you to lose money on the deal.