Solar panels are becoming ubiquitous across suburban landscapes, and you've likely started to consider getting solar yourself.

Among the various financing options available, solar leases are often touted as an attractive way to go green without the upfront costs of purchasing solar panels. However, beneath the surface, solar leases can sometimes come with a set of financial pitfalls that potential lessees need to be aware of.

What is a Solar Lease?

A solar lease allows homeowners to use solar panels installed on their property without owning them. Essentially, a solar company installs the panels at no cost to the homeowner and maintains them throughout the lease period. In return, the homeowner agrees to pay a fixed monthly lease payment, typically for a term of 20 to 25 years.

How Solar Leases Work

When you sign a solar lease, you agree to let the leasing company install and maintain solar panels on your roof. The leasing company owns the panels, and you pay them a monthly fee to use the energy produced. This fee is usually set at a rate slightly lower than your current electricity bill, promising immediate savings on your energy costs.

The leasing company handles all aspects of installation and maintenance, which means you don’t have to worry about any upfront costs or ongoing upkeep. At the end of the lease term, you may have the option to renew the lease, purchase the panels at a reduced cost, or have them removed.

Why People Choose Solar Leases

1. No Upfront Costs: For many homeowners, the biggest advantage of a solar lease is the ability to go solar without any initial investment. This can be particularly appealing for those who cannot afford the significant upfront cost of purchasing solar panels.
2. Maintenance-Free: The leasing company is responsible for all maintenance and repairs, which can be a relief for homeowners who are not interested in dealing with the technical aspects of solar energy systems.
3. Predictable Payments: Solar leases provide predictable monthly payments, making it easier for homeowners to budget their energy expenses.

The Predatory Pricing of Solar Leases

While the concept of solar leases sounds beneficial, it’s crucial to understand the potential downsides, particularly regarding their pricing structure.

1. Slightly Lower Than Electric Bills: Solar leases are often priced just below the average monthly electric bill. This setup might seem like a good deal at first glance, but it can be deceptive. By pricing the lease just below your current energy costs, leasing companies ensure that you see immediate savings. However, these savings are often minimal compared to the potential savings if you were to purchase the system outright.
2. Long-Term Financial Impact: Over the term of the lease, the total payments can add up significantly. In many cases, homeowners end up paying more over the life of the lease than they would have if they had taken out a loan to purchase the panels. Loans for purchasing solar panels can offer lower interest rates and the opportunity to own the system outright, leading to substantial long-term savings.
3. Escalation Clauses: Some solar leases include escalation clauses, where the monthly payment increases by a certain percentage each year. This can erode the initial savings and lead to higher costs over time, especially if the rate of increase outpaces the rise in electricity costs.
4. Transfer Complications: If you decide to sell your home, transferring a solar lease to the new homeowner can be challenging. Some buyers might be wary of taking over a long-term lease, which can complicate the sale process.

Other Predatory Practices in Solar Leases

1. Misleading Sales Tactics: Some companies use aggressive and misleading sales tactics, promising unrealistic savings or failing to disclose important details about the lease terms and escalation clauses.
2. Hidden Fees: Additional fees for maintenance, early termination, or transferring the lease can add unexpected costs.
3. Lack of Transparency: Leasing companies might not be fully transparent about the total cost of the lease compared to ownership, making it difficult for homeowners to make an informed decision.

Conclusion

Solar leases can be a convenient way to adopt solar energy without the upfront costs, but it’s essential to approach them with caution. Understanding the long-term financial implications and potential pitfalls is crucial. By carefully evaluating the terms and considering alternative financing options, homeowners can make a more informed decision that best suits their financial situation and energy needs.

DIY: Another Path

We get it, solar can be a pretty penny, making solar leases seem attractive.

But there is another way! At DIY Solar, we give you a custom solar kit you can install yourself. This saves you the big install fees and the solar bro's commission (which is VERY big in most cases).

In fact, we're 40% less than the national average, making solar much more accessible.

Start by getting a quote with us today!