So, you've been thinking about taking the leap and putting some of your hard-earned money into solar photovoltaic (PV) panels. Well, guess what? It's not nearly the leap it used to be. Several innovative financing structures have emerged in the last few years that allow more people to get into solar than ever before -- and for less money than ever before.
1. Solar Leasing
Do you want solar panels on your roof but you’re afraid about making the financial leap to full ownership? Leasing solar panels might be the best option for you, especially if you have an above average solar resource, lots of extra roof space and little to no money to put down.
Solar leasing, also known as a Solar Power Purchase Agreement, is a pretty simple (and cheap) option. Each month customers make a lease payment which covers the solar power system that produces some or all of the electricity you use in your home or business. If you consume more than you produce, the remainder of your electricity is purchased from the utility. Unlike other rooftop solar ownership models explored here, a third-party developer owns, operates, and maintains the solar PV system.
Like most other leasing programs (eg. cars, office equipment), servicing and repairing your solar system is done by the solar lease provider, usually at no cost to the customer. As such, you will not be eligible for the 30 percent federal Investment Tax Credit. But--and here’s the kicker--solar leases usually require no upfront cost. Some companies will charge a $1,000 upfront fee for service. But the more money you put down upfront, the less your monthly lease payment will be.
Most solar leases have a 10 to 20 year contract period, normally transferable to a new owner of the home. If you stay in your home and your panels are still pumping out the watts by the end of the lease period, most companies will give you an option to buy.
Several companies have jumped into the solar leasing game including Sungevity, Solar City and groSolar, but do some research to learn which ones have had success operating in your area and whether solar is the right choice for you economically.
2. Group Purchasing
Investing your hard-earned income in anything can be a daunting task, let alone when that thing has the regional variations and technical complexity as solar panels and solar . Add the looming fear of getting screwed by fly-by-night solar installers and you have a recipe for solar investment paralysis.
If you’re at all familiar with the wildly popular hyperlocal group purchasing platform, Groupon, you already understanding the guiding principle behind San-Francisco-based start up, One Block Off the Grid home solar (1BOG). By negotiating a large group discount with a network of reputable solar installers and passing some of the savings onto the customer, 1BOG’s solar financing programs save customers money, time, and perhaps most importantly, the headaches associated with getting all of the rebates and incentives sorted out and determining if solar is right for you
With active campaigns in San Francisco, New Orleans, Los Angeles, Philadelphia, Denver and San Antonio, among others, homeowners in communities across the U.S. are saving as much as 15 percent on a solar system for their home, an investment that can pay itself off in as little as 3 years in some cases.
But the bigger savings provided by 1BOG may actually come in the form of time saved by the customer researching the solar installation. By vetting the solar installers, coordinating applicable solar rebates and incentives, and walking customers through the process with objective analysis and project viability, group solar purchasing programs can eliminate many of the trust and knowledge issues that stand in the way of large-scale solar PV adoption in the U.S.
3. Community Solar Gardens
What if you want to buy solar panels but don’t own any roofspace or land to put them on? If you live in an apartment or condominium this is most likely your situation. But what if you have plenty of roof space and land but simply live in an area where the shade would make installing solar anywhere from impractical to totally unviable? You probably think you’re out of luck, right? Wrong.
Several states including Colorado, Washington, Maine, Vermont, and Massachusetts have all passed laws that allow groups of individuals to collectively own a solar array and cash-in on potential benefits from net-metering laws and tariffs. So taken by the idea in his home state, U.S. Senator from Colorado, Mark Udall, has even introduced the Community Solar Gardens idea to the Senate.
Much like the community wind model that sprung out of Denmark in the last decade or so, Community Solar Gardens, are usually structured to allow individuals to buy as few or as many “shares” in a given solar installation. Customers then receive dividends or credits based on the percentage of the array they own. Depending on the size of the solar garden, customers may be able to buy into the system for substantially less than virtually any other solar ownership model.
Although installation of community solar gardens will normally cost the same as it would if you just wanted to put a large solar array on your roof or in your backyard, the installation costs and other licensing or hook-up fees are borne by all of the solar garden owners, representing a substantial cost savings to the group.
4. PACE (Property Assessed Clean Energy) Financing
First launched in Berkeley, California, so-called Property Assessed Clean Energy programs could be the safest and easiest way to purchase residential solar panels for your roof. Because PACE programs tie the cost of the solar installation (or energy efficiency projects and upgrades) to your property taxes, getting started requires virtually zero upfront investment. They normally don’t even require credit checks.
After a homeowner applies to their city or county and gains approval for the solar system, the price of the new array will be levied as part of their property tax assessment over 20 years, at a competitive rate of interest. But what if you want to sell your home? No worries, the solar system and the tax liability go to the new owner of the home.
Unfortunately, just as the popularity of PACE financing programs started to take off in cities and counties across the country, the Federal Housing Finance Agency (FHFA), which regulates federal mortgage guarantors Fannie Mae and Freddie Mac, effectively put a stop to any new PACE projects earlier this summer, determining that PACE programs “present significant safety and soundness concerns.”
Considering the effectiveness and political popularity of financing programs like these, however, once the dust has settled on the national housing and mortgage situation, our bet is that Property Assessed Clean Energy financing programs will make a return in some form or another. Read more about PACE financing programs at the DSIRE Solar Portal.
Community solar gardens photo: Some rights reserved by Avinash Kaushik
PACE photo: Some rights reserved by mjmonty
Solar leasing photo: Some rights reserved by Wayne National Forest
Group purchasing photo: Some rights reserved by jimw