BEohana_Solar_Lease

In early 2008, something very important to the solar industry was born: the Zero-Down Residential Solar Lease.

San Jose Mayor Chuck Reed is credited with issuing an industry challenge which resulted in several Zero Down Solar Lease programs to be offered in San Jose and San Francisco Bay Area. In general, the way the zero down solar lease works is similar to how an automobile lease works. The homeowner signs a lease contract, pays a downpayment and deposit, makes periodic installments on the lease during its term, then buys-out the system at the end of term. It's a familiar concept.

However, the important innovation that occured within the solar industry is that a good solar lease can actually be cheaper than an outright purchase, and come with "free" installation and maintenance. Sounds too good to be true, doesn't it? But here's how such a thing can be true: by getting someone else to pay the true cost of the solar system, namely the Federal and State governments.

How the Solar Lease works (and why it's cheaper than outright purchase):

• The solar company designs a custom, state of the art solar system.
• The company retains ownership of the solar system, and arranges lease financing.
• Commercial solar subsidies can offset up to 75% or more of the cost of the solar system. For example, at the time of writing, California has 30% ITC tax credit, 35% depreciation, and significant state rebates that all add up to approximately 85% of the total cost of the solar system. These subsidies are not available to the homeowner, except through a solar lease.
• Some solar leases are available for zero downpayment.
• One solar lease that I know of also has a $1 buyout. Other companies may follow suit in the near future.
• If the homeowner finds a good solar lease, there is no large upfront investment, and no backend balloon payment. Plus, the actual lease payments can be offset completely by savings generated by their new solar system on their electric bill.

• Finally, the homeowner can pre-pay all lease payments upfront for even greater savings.

At a time where solar engergy is still generally a little more expensive than traditional utility energy, smart financing and maximized subsidies can actually tilt the equation in your favor. Look for more solar lease options in 2009 when the Federal ITC is renewed.

Final Note: call your Senator and let them know you want the Federal ITC renewed for solar and alternative energy. We need a good incentive program to jumpstart the soalr industry, and as you can see from this article, going solar can be a zero-cost choice.