Solar photovoltaic panels for your home can be expensive, requiring up-front investments of thousands of dollars. Even after federal and local tax rebates, it can take years for that investment to pay itself back to the homeowner in locally generated electricity.
Fortunately, more and more states are authorizing solar leasing companies and green power suppliers, making renewable energy as affordable as your monthly electric bill!
Installing solar panels to generate your home electricity has many benefits for you, our country, and our planet:
- Protects you from escalating energy costs – Electricity gets more expensive every year. Over the last 35 years, the average annual rate increase has been 6.5% (high energy users have seen substantially greater increases).
- Supports clean energy – The average solar PV residential system (based on 5kW), would save nearly 175 tons of carbon dioxide over its 30-year lifespan, equivalent to removing 32 cars from the road. It takes approximately 4,487 new trees to absorb that much CO2 produced by fossil fuels. Solar panels also reduce the need for power generated by coal or natural gas, which releases mercury, sulfates and other pollution into the air and water.
- Adds value to your home – The value of a solar system is added to the appraised value of your property and does not increase your property taxes. Solar is one of the few home improvements that can be justified in terms of return on invested dollar.
- Provides unlimited power – Solar is a true renewable and sustainable source of energy. It reduces your dependency on fossil fuels and produces your own electricity while reducing your carbon footprint. One of the side benefits is that with photovoltaic panels, homeowners have the ability to generate excess electricity during the day and sell it to the utility company through “net metering”, i.e., you run the meter backwards.
- Reduce the need for additional power plants – Your utility company’s peak demand is during the day. Meeting peak demand is how utility companies justify more power plants. On the hottest days, the oldest, dirtiest power plants are cranked up. Through net metering, you’ll sell the output of the photovoltaic panels to the utility. This is even more efficient because most people are at work during peak hours, and don’t need the energy their solar panels are generating at home. With enough people net metering, we will reduce the need for additional power plants that are only used to meet peak demand. That will prevent fossil fuel pollution for everyone and help keep rates from going up too fast.
- Rebates and tax credits are available – Various financial incentives are available from the State and Federal governments to encourage investment in solar energy.
Solar Power Purchase Agreements
A power purchase agreement (PPA) is a type of solar financing where a private solar company installs, owns, monitors and maintains the solar panels and equipment on your property, and you pay only for the solar energy it produces, much like you pay your existing power company now. PPA companies will also often work with you if you rent, as long as you have written permission from your landlord.
Sometimes a PPA’s rate is flat and sometimes it’s calculated to rise slightly over the years, but unlike utility company rates, your PPA rate is pre-negotiated for the lifetime of the agreement (usually 15 to 20 years). You can even pre-pay for all the energy you will need up front, locking in today’s prices for decades to come!
This means you get clean, renewable solar energy on your home at a set rate, instead of dirty, coal-fired grid power with rates that can go up at any time and by any amount. With a PPA, you know exactly how much you’ll be paying for your energy for as long as you have it.
If you can lock in an energy rate equal to or lower than your current monthly electricity bill, a PPA will get you solar panels with no debt, and could save you thousands of dollars in electricity costs down the road!
Solar Panel Leasing
A solar panel lease is much like a car lease. Someone else owns, monitors and maintains the equipment, and you pay a monthly fee to lease it. Since your electricity is virtually free, the monthly payments for solar leases are often lower than your current electricity bill. There are even programs for renters where the panels are installed non-invasively on the property.
A solar lease differs from a solar power purchase agreement (PPA) in that you are leasing the equipment, whereas with a PPA, you’re paying for the energy the panels produce. However, similar to a PPA agreement, the advantage of a solar lease is that instead of making a large upfront investment in solar panels, you can get started for little to no money down.
Figuring out if a solar lease is worthwhile is easy: if the monthly lease payment is less than what you’re currently paying for electricity, leasing probably makes financial sense for you. You’ll be able to start saving money from the first day your panels are installed, for little to no upfront investment.
When your lease is over (leases can vary in terms from 10 to 20 years), you’ll have a few options. You can renew the lease for a new amount of time, buy out the system at fair market value, or ask your leasing company to remove the system. If you move before your lease is over, you can transfer the lease to the new owners.
Owning Versus Leasing?
If you plan to stay in your home a long time and can afford the up-front cost of solar panels, it may make more financial sense to buy them yourself because the total return on your investment is most likely going to be greater.
What you give up is the hassle-free aspect of leasing because the leasing or PPA company monitors, maintains, insures, and guarantees the production of the system. When you own the panels yourself, all that is on you.
Each state has its own rules regarding PPAs and solar leasing programs, and there are several states now with incentive programs available, so check with your local Department of Energy or utility to see what they offer.
There are also many different solar companies out there providing services with many different lease terms and fee schedules. Be sure to read the fine print on any lease and do your homework on any company you choose to do your installation.
Shopping for Solar Leases and PPAs
When you’re gathering quotes on solar leases, be sure to get good answers to the following:
- What will my monthly payments be?
- Will those payments go up over time and if so, by how much?
- What’s the total cost of the lease over its entire lifetime?
- How does that compare to purchasing the same size system?
- What’s my short term and long term ROI on the lease/PPA?
- If I want to buy the solar system at some point, what are my options?
- If I decide to buy the system at fair market value, how is that value determined?
- How does this leasing/PPA provider handle the solar rebates and incentives associated with installing the system?
- What happens with my panels if I move?
Here are a few national solar organizations to get you started with putting solar panels on your home. (Though don’t forget to look up local companies in your state!):
- Pure Energies Solar Advisors is a solar advocacy group that can help you determine if your roof is appropriate for solar panels. From there, they can connect you with solar installers in your region.
- Solar Savings America connects customers with solar panel installers and various incentive programs that make going solar more affordable.
Can’t Do Solar? You Can Still Get Your Power from Renewable Energy!
Can’t put a solar panel on your home? You can still get your home (or business) electricity from renewable sources like solar and wind.
Increasingly, electricity customers are being given the option to select where they would like their electricity to be supplied from, either as retail power markets open to competition or when their regulated utilities develop green pricing programs.
More than 50% of retail customers in the United States now have an option of purchasing a green power product directly from their electricity supplier.
By choosing to purchase your electricity from a green source like solar, wind, or geothermal, you can support increased development of renewable energy sources, which can reduce our need for fossil fuels such as coal, oil, and natural gas. Greater reliance on renewable sources also provides jobs and other economic benefits to your state, and can improve our national energy security.
If retail electricity competition is allowed in your state, you may be able to purchase green power from an alternative electricity supplier. Some states have already implemented electricity competition.
Check the DOE Green Energy map
Here are a few national and regional green power suppliers that offer renewable energy credits (RECs) through your existing utility company:
Even if your state is not implementing electricity market competition, you may still be able to purchase green power through your utility company. More than 850 power companies in nearly every state offer “green pricing” programs that enable you to pay a little more to get your energy from renewable sources.
Call your power company to ask if they have a green power program you can join.
Power in Your Own Hands
Installing solar panels on your home can make a real difference in reducing your bills and the ecological damage our dependence on fossil fuels creates—which is not only important for the planet, but is absolutely vital for the health of our families and communities too.
With solar leases, clean energy and greater self-sufficiency is within reach of more people than ever. Maybe even you!
This article was excerpted from my book Sustainability Starts at Home – How to Save Money While Saving the Planet. For more money-saving, planet-friendly tips, pick up a copy today!
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50 Ways to Love Your Mother contains 50 simple, “entry-level” ways to live a more sustainable lifestyle. Not only will these baby steps go easy on the planet, but they will go easy on your wallet, too.