4 Reasons Why Homeowners Lease Solar
These are the reasons why so many homeowners go with solar leasing over solar ownership.
The solar industry is seeing a major switch away from solar leasing in recent years but for a long time it was the more popular route for solar installers and homeowners. The residential solar industry as we know it today is about 11 years old. In 2012, 60% of new residential solar installs were solar leases. In 2021, the numbers are showing a dramatic shift away from solar leasing.
This didn't happen in one year but as the industry matures there’s a more dramatic shift away from solar leasing. Below is a breakdown of new solar homeowners installed in 2021:
New Residential Solar Installs in 2021:
Owned without financing 9%
Owned with financing 67%
Leased 24%
These are the 4 Reasons Why Today Solar Leasing is Still a popular Option for Homeowners looking to go Solar.
1. Ease of Transition From Local Utility
The simple idea of paying a dime for something rather than a nickel and a dime is how solar leases have been sold over the last decade. Electricity is typically billed by the kilowatt hour (kWh) by local utility companies. Solar leases simply modeled this idea and said, ‘get your electricity for a few cents cheaper per kWh.’ The simplicity of that message has led nearly one million homeowners to obtain solar leases. On the surface, it sounds simple and easy. The trouble with this message is that there are about 30 pages of fine print revealing how solar leases can be far more complicated in the future when the homeowner may want to sell their solar home. Unfortunately, most people don’t read the fine print.
2. No Tax Liability
Since the homeowner does not own the solar system, the solar lease company collects the tax credits on the leased solar system. If a homeowner does not have any tax liability then they may be a good candidate for leased solar. The tax credits available for homeowners from the federal government are based on taxable income. If you do not pay enough taxes to have a tax liability, a solar lease may be attractive to you.
3. Debt Aversion
A solar lease is a vehicle to go solar without taking on any debt or out-of-pocket expenses to install solar panels on your home. However, paying cash out-of-pocket is the least expensive way to go solar, followed by financing an owned solar system. The most expensive way is leasing solar. Taking on debt or paying out-of-pocket may feel like too big of a risk just to reduce or eliminate your local utility bill.