What’s a solar lease?
Solar leasing in Texas makes up a very small percentage of the ownership structure due to the lack of a state-wide incentive program. Solar leasing is much like a car lease, where a third-party company owns the equipment, and you pay a monthly, or one-time fee to lease the system, usually for a term of 20 years.
Most solar leasing that’s been done in Texas, has been done on a prepaid basis – meaning ONE initial payment made up-front, similar to a purchase. This payment takes into account any rebates and incentives, like the 30% federal tax credit, as well as the depreciation on the equipment that can be taken by the Leasing Company. In general, a prepaid lease is 50%-60% cheaper than a purchase, depending on available rebates etc.
Solar Lease vs Purchase
If you plan to stay in your home a long time (10 years or more), can afford the up-front cost of a solar installation, and can benefit fully from the 30% tax credit, it usually makes more sense to purchase your solar array. However, there are benefits gained from a lease that MAY outweigh ownership for some, and these include:
- Power Production Guarantee – the leasing company provides a guarantee of the annual energy generated
- Insurance – a blanket general liability policy required by some rural electric coop’s.
- Lifetime replacement warranty – including labor, to replace damaged, faulty or worn out panels or inverters.
- System Monitoring – automated monitoring system, alerting homeowner to potential under performance.
- The leasing company acts as an additional back-stop to the installer, panel or inverter manufacturer leaving the business.
When the solar lease is over you’ll have a few options. First, you can renew the lease for an extended period of time (usually 5 years), buy out the system for a fair market value, or ask the leasing company to remove the system. The lease is transferable of course, so if you move during your lease the new owner obtains all the rights of the original lessee.*
The bottom line, as always, is to educate yourself, talk with professionals like Texas Solar Outfitters and then determine the best option for your circumstances.
If you’d like to be notified when solar leasing is again offered in Texas, please go to Contact Us in Houston or Austin and specify solar leasing in the comment section.
*Most solar leasing companies require a minimum credit score of 700 to qualify for a monthly lease.