Solar power for less than your cable bill

April 24, 2008

solarpanels.jpgSolar power companies have been working around the clock to drive down the price of clean electricity from the sun so it can one day be as cheap as the energy we get from dirtier sources, like coal plants.

Until we get there, however, some solar panel installers have come up with a solution that they say will give more people access to solar energy. How are they doing it? By allowing customers to lease, rather than buy, the photovoltaic solar panels for their roofs.

It’s the same idea, really, that has enabled some people to get behind the wheel of a luxury car they could otherwise not afford — low or no upfront costs followed by a monthly bill.

SolarCity, based in Foster City, California, is one company that recently started offering leases to its customers. Chief Executive Lyndon Rive told Reuters he wanted to do away with the hefty cost of buying solar panels — on average about $20,000.

“Even those who really want to make an environmental change can’t part with $20,000… the solution is just too costly for them.”

Under SolarCity’s lease program, customers with a small home could pay as little as $70 a month for a 2.4 kilowatt system, Rive added. The company is also allowing customers who sign up before July 31st to put no money down on their system. After that, upfront costs should be between about $1,000 and $3,000, Rive said.

“We can essentially make it so that everybody can now afford clean power,” Rive said.

The leased projects will be financed through Morgan Stanley, and SolarCity said it will serve as a one-stop shop for both installation and financing.

Right now the program is only available in California, but SolarCity is expanding to Oregon, Arizona and has plans to go to the East Coast.

32 comments

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Currently, California utilities will only pay the monthly offset for power; meaning that any surplus power you deliver to the grid above their monthly bill is a gift to the utility.

There is a pending bill that will allow the power company to pay for that surplus power. If it passes, I believe it will make home solar generation even more viable.

Posted by Lad | Report as abusive

This is a good start. There is a small company in Spring, Texas that has developed a new power generation system that will provide almost half the 10,655 kilowatt-hours (kWh) of electricity used by the average American household each year. It requires no change in the electrical wiring of the home and meets the building codes of every city in the US. Installation time 4 hours. Cost estimated to be about $500 USD.

Posted by Ed | Report as abusive

To Ed, who made the posting 4/27 regarding the small solar company in Spring, Texas: What is the name/address of this company?

Posted by Roger Harris | Report as abusive

To Ed, who made the posting 4/27 regarding the small solar company in Spring, Texas: What is the name/address of this company?

michaelphxaz@yahoo.com

Posted by Mike S | Report as abusive

re: Ed’s comment on 4/27. I also would like to know the name of the “small company” and its “new” generation system. There is nothing on the web about it. Being from Phoenix, AZ I am continually amazed at how stagnant solar is in my state. Solar City sounds like they’ve got some creative folks that can help make this happen. Subsidies abound, but it’s still expensive to get started, especially in this down economic period.

Posted by jfl97 | Report as abusive

I live in very sunny Las Vegas. It will be very interesting to see if these systems will ever make it to this locale. I may be currently out of the loop on why it is widely available in California, but why not make a stop here in Nevada where we get 330 days of unblocked sunlight before going to the East Coast? I left PA due to all of the gray days there!

Posted by BOMAC | Report as abusive

FreeCleanSolar.com has a network of installers and lenders to help homeowners and small commercial owners. You get multiple bids to compare.

[...] Solarbuzz | Reuters [...]

Try this link to an article posted today, 5/14/08, in RenewableEnergyWorld.com.

http://www.renewableenergyworld.com/rea/ news/story?id=52391

Posted by Mike V. | Report as abusive

To those in AZ, NV, and most other states in the US, the reason solar projects have not been abounding in your states is because your states don’t provide incentive subsidies for solar power. All California ratepayers pay a Public Goods Charge (a fraction of a cent for each kilowatt hour used) which contributes to the progressive incentive programs for energy efficiency, renewable energy, and sustainable development in California. Without subsidies, the payback for solar power is still very long. (I’ve heard Nevada may start a solar rebate program.) If you want progress on alternative energy sources, tell your state legislators!!!

Also, the federal tax credits for renewable energy projects are going to expire on Dec. 31, 2008. The oil lobby is against the tax credits, so George Bush won’t sign the legislation.
Join The We Campaign at wecansolveit.org
http://www.wecansolveit.org/page/s/tax
and tell your legislators to pass the extention and override Bush’s certain veto!

Posted by nrg-ngr | Report as abusive

SolarCity has a lease program for $70 month, would I be saveing that much on my elec. bill?

Its about time that lease option is available. The lease payment will sure offset the bills because the kwh use from the utility will be reduce.

Financially speaking, when they say you can buy the system outright after the lease expires, I notice nothing on costs of that option. If it’s like auto leases then it can be summed up as a huge ripoff. So for instance if you paid $15,000 over the 15 year life of the lease, which actually is a low ball figure and they want to sell it to you for $15,000 after lease expiration, then it’s a blind ripoff. Anyone have any more information on the cost at end of lease?

Posted by Bob | Report as abusive

Bob,

I did an analysis of the residual value in the lease program. With any lease you simply can’t add the two figures together. You need to account for the future value of money. For instance, if your rate of return on your investments is a modest 5% annually, the present value of the residual payment is much less than $15k. The way to look at the lease is whether it is cash flow positive and how it compares to paying your utility company. For instance, if you lease a system at $120/month and it saves you $180 in PG&E bills – then that is a $60/month net gain. Furthermore, PG&E rates will only go up so that savings will increase over time. 15 years from now you could have them take the system away and you would have saved significantly over the term of the program. A car lease is not a valid comparison since a car does not generate income and a car is on a rapid depreciation profile. Hope this helps since understanding the concept of leasing solar is complex and not as simple as adding some basic numbers together. I have done a full analysis and it is a win situation even with very low rates of return.

Jeff.

Posted by Jeff Critten | Report as abusive

As the owner of a Solar Energy company, I know this lease to be a joke, and totally an unnecessary rip off. When we sell a system outright, we never take more than $1000 down, in fact it is state contract law. If anyone takes more, its illegal. Then, our systems ALWAYS save the customer money from day one, i.e. the payment for the system is less than the amount of electric bill we eliminate with solar. The caveat is that the electric bill needs to be over $150 mo to break even or better. But when our loan period is done (10 – 20 yrs customer’s choice) the system on their roof is thiers to keep, not theirs to buy.

PLUS!! The market rate for a 2.5kW system in CA is about $20,000, so basically, this lease means you first buy the system on payments, then you buy it again at lease end. Its a ripoff.

I live on the east coast of North Carolina and I can not wait to see Solar City come this way. I don’t mind the leasing program because I know in few years down the road I can have Solar City upgrade the system to one that utilizes newer technologies thus by only costing me little to none, a month, for that upgrade. In short, leasing is not for everyone.

There are a few wind machines here but I can’t install one since I live near an airport. There are even fewer solar panels being used but solar energy is my best and, most likely, my only option. So, Solar City, the sun is shining and my roof is bare and waiting for an installation. Get on with it, would ya!?!?

Posted by Ronnie Twyne | Report as abusive

Bob,

The lease buyout is in very small print at the bottom of the lease program example on Solar City’s website. The buyout is $14,000. I can’t wait until Solar City comes to the East Coast and I hope that includes Maryland because I want to seell for them when they get here!!!

Posted by Bryan K. | Report as abusive

Frustrated by lack of state incentives? Join the club. I did some research and found out my state, Oklahoma, is 14th in the nation in insolation rate or amount of sunshine received on an annual basis – yet our state incentives are dismal. Furthermore, when the sun isn’t shining here, the wind is usually blowing so there’s another green power opportunity. I’m terribly frustrated my state is so far behind taking advantage of such opportunities.

As consumers, we need to change our thinking about green power. We don’t bat an eye at spending $20,000 to remodel a kitchen – but doing the same for solar panels on the house is such a difficult decision? Please. Solar no doubt offers the same if not a greater return on the investment particular in a future housing market where young buyers will be seeking out these green power options.

Solar installers need to be more creative too to help change our thinking. Since the systems are modular, why not start a homeowner off with a more financially palatable, $5000, grid-connected system? Yes, the homeowner would see only a small reduction in his utility costs but would they then realize the bigger impact of a more expanded system? I don’t know jack about installing solar, but I can’t imagine it would be that more difficult to then upgrade the system with more panels and higher capacity.

Posted by John | Report as abusive

Hello:
15k or 20k for a solar system may be a big amount for normal people. I tried to calculate for 3 kWh and the result is about 20 k.
Why the solar system producer/ manufacturer does not put them in a modular system (5k, next: 10k, next 15k …).
Anyway I am working on some projects to promote the solar energy use in Arizona … It is a lot of energy here from the sun now (110 degree Fahrenheit) and that is free.
Bye, Minh

Posted by Minh | Report as abusive

does it need also an installation?

To Ed: I noticed loads of request for the name of the company supposedly mentioned by Ed – “There is a small company in Spring, Texas that has developed a new power generation system that will provide almost half the 10,655 kilowatt-hours (kWh)”. I am still waiting like many others for the name of this company!!!.

Posted by Willie | Report as abusive

This is a great idea, I wish it were available outside of California.

i saw something on tv. the basic set up was this. there were mirrors on the rooftop in lines that would follow the sun. they would beam a light into a small photovoltaic cell at the top. (similiar to a satellite dish design) the intent was to maximize efficiency and make it cheap. i think its still in the testing stages though.

Posted by Callum | Report as abusive

I’ve been in the solar business in CA for the last 30 years. There is a story here every week about some new revolutionary solar breakthrough that will happen about the same time as the sun burns out. This is with the local VCs dumping millions of their investors dollars into these projects. A little co. in Texas has less of a chance of getting something off the ground as these guys here in Silicon Valley.
The existing silicon based solar modules are a 50 year old technology that will not be eclipsed by the cheap new breakthrough thinfilm technology that the takes acres instead of a few square feet to do the same job.
The reality is if you borrow to buy a solar system now, you will be so far ahead that all the lease calculation justifications or the thousands of dollars you pay the utility for the same power will not make any sense.

SolarCity will abandon the installed system at your home at the end of the 15 year lease. This means that you still retain the hardware and all the functionality of the sytem after they abandon. The only thing you are responsible for after their abandonment are repairs as the warranty would be expired. Really becomes a great deal to the consumer to lease the system.
My PG&E bill is approximately $750/month in the summer time. They system I am having SolarCity install is going to cost me $286 per month. I will have over $400 per month in savings. Work that out over 15 years and its a no brainer.

Posted by BvB | Report as abusive

I’ve been looking at getting a solar PV system for my home for a couple years and was impressed with SolarCity’s lease option. The only catch that I find is that they seem to be charging more for the system than if I would have purchased the system outright. I received two quotes for the system; one for purchase and one for lease. I can only estimate the lease rate but after calculating the monthly payments, approximate interest, and buyout amount, it seems as though they have increased the cost per watt. The original cost was in line with other bids from other contractors that I had received. However, the lease rate seems like they’ve increased the cost per watt by about $2 (which can increase the total amount for a 3kw system by $6,000). That’s the cost that’s being passed on to Morgan Stanley (they are the bank in the background). I’ve asked them to provide me with a cost per watt for the lease but they won’t do that.

I’m not overly familiar with how the rebates work, but from my understanding they are using both the commercial rebate (because the bank is buying the system) and the residential rebate offered by the local utility provider (because it’s being installed on a residential property). This “double dipping” doesn’t happen on the purchase option, only with the lease option. And as nrg-ngr mentions above, the 30% tax credit expires this year. I’ve heard that this credit won’t expire completely, it just gets reduced to 10% unless Bush provides the funding to continue this program. This reduced tax credit will only increase the lease rate as of next year.

The numbers still work out for my case but it worries me to know that they are the only company that offers this lease and may be taking advantage of this. Since this lease is new, I have to imagine that other companies will follow and offer similar lease options and that would hoping provide the checks and balances that are needed in the system.

Posted by SW | Report as abusive

If someone can explain the recently passed solar power tax legislation in the US, I would really appreciate it. I’m trying to understand what the minimum reqiured investment is to use the credit and what type of solar equipment/installation is required?

Thanks,

Will Johnston
http://www.growandmake.com

This is a really great idea. Most people dont have 20 grand laying around just to help a good cause with the new renting/monthly payment idea many people will probably use this new system because it will make a huge impact on the world and help change it for the better. And it is even cheaper then cable!! Yes I know people would rather have t.v then solar pannels but look at which one will pay off in the long run for allowing you to live longer. Plus if you have to you can just push that extra want away and rent the pannels to do your part that can help fix the world.

Posted by Best Idea! | Report as abusive

it cost too much money. you can find a better way to spend the money.$20,000 you could spend that money on a lot more imporant things. like giving homes to the homeless and heat.

Posted by name | Report as abusive

All conventional silicon wafer solar producers will be left in the dust, when Konarka solar gets its new manufacturing facility in New Bedford Ma, into operation in early 2009. They will be able to produce 100 feet of solar panel material per minute, and expect to produce 10 million sq meters of solar panel material in the 2009. Konarka has developed photovoltaic ink that will allow them to produce solar panels on a printing press.

Posted by Bigdave | Report as abusive

It is nice that some solar panel installers are coming with a solution that they say will give more people access to solar energy

solar leasing is a bad deal for homeowners. You end up paying more than you were before AND you are locked into a long-term payment contract. If you ever want to sell your home, you still have to pay for the solar lease, make a big balloon payment or get the new owner to sign a solar lease. Good luck with that. For more details checkout http://solarleaseripoff.com

Posted by SolarGal | Report as abusive

hey guys, I am planning to install this at our house sunpowerportcom. What do you think ? any suggestions or comments much appreciated. :D

Posted by sunpowerport | Report as abusive