A scam? A rip-off? A deal of the century? Ready or not folks, it’s here! A solution that gives access to solar power even to the most cash strapped green minded suburbanites and….… it’s brought to you by the very people who delivered to us the sub-prime mortgage debacle. It’s called a “residential solar lease” which is a “no money down” program that can get you electricity cheaper than what you pay out to Pepco or BGE on monthly basis. Sounds familiar?
The idea is simple; instead of buying your panels by dishing out thousands of dollars upfront you lease them for “one low monthly fee.” You win, the solar company wins, environment is happy. So what’s not to love? How about a 15 year contract, a 3.9% increased payment every year and our Wall Street friends who have their fingers all over this sweet deal?
On the surface, this sounds like a viable option for many home owners. It solves an expensive problem of purchasing the panels outright. It works a bit like a car lease where home owners sign a deal that locks them in for 15 years with the option of extending their lease or buying the panels at the end of the contract. With a solar lease, your monthly payments can be around $110 which, according to the service providers, will normally be around 15% less than your utility bill. Are you sold yet?
After all, the ways these companies and even our media like to paint it – it’s a no brainer deal. SolarCity, is the first to start aggressively marketing this contract to home owners all over. SunRun is another similar co.
Who really finances these deals? Banks on Wallstreet of course. And there’s serious money to be made… Investors historically expect seven percent to eight percent, which includes the tax benefits and a slice of profit during the life of the fund, amazing profits being squeezed out of the residential solar market. Now they want ten percent or more! It sure reinforces how much some of these greedy people really care about our environment.
So before you jump on the band wagon, let’s look at the bigger picture and examine this “best new thing since sliced bread” from all angles:
- 15 year contract: it is not easily transferable if you decide to sell the house. (According to Solar City: “If you sell your home before the end of the lease, you can transfer the lease to the new owners if they qualify with excellent credit, or you can prepay the lease and add it to your home asking price.” That’s 700 and above FICO score.)
- Not for everyone. If your electric bill does not exceed $110 this program makes no sense financially.
- You never own the solar panels. In fact you will have to either return them after 15 years or purchase them from the solar company at the end of the lease.
- Your payments are actually going to go up 3.9% every year.
- You are not the one who gets the rebates for the purchase of solar panels.
- You maybe going off of the utility grid but you’re sure are tied into Wall Street’s grid.
Now at a first glance, this deal sounds very appealing but if you really look, this scheme makes no financial sense. Why? Because you are simply better off buying the panels and financing your payment. You save big time this way!
Perhaps, the biggest problem is the fact that it’s not you who gets the subsidies and rebates, it is the solar company! By paying lease payments throughout the life of the contract you become a cash cow owned by the solar company. While they get the panels for a fraction of the cost you end up paying the full price and then some. Makes no sense!
Here is some numbers to demonstrate how they deceive you. This scenario considers a 3.9% increase in your yearly payment throughout the 15 year tem lease:
1st Year Monthly Payment: $110.00 Total per Year: $1,320.00
5th Year Monthly Payment: $128.18 Total per Year: $1,538.16
10th Year Monthly Payment: $155.08 Total per Year: $1,860.96
15th Year Monthly Payment: $187.74 Total per Year: $2,252.88
Total Investment for the life of lease: $26,217!
Without the 30% + rebates that are currently generously offered to you by the state and federal government.
Why lease when you can buy them?
It’s obvious; your best bet is a good payment plan. Put ”0″ down and buy the panels. Your monthly payments would still be lower than your Pepco bill and they would stay the same till the loan is paid off. Once you’re done with your payment plan, you OWN that panels. When all will be said and done, your total investment will be much less!
I’m not against Wallstreet. We need the banks to extend credit to qualified home buyers and keep small businesses going. Wallstreet is an intrinsic part of this economy. It’s just some of the financing deals that they cook up are so dangerous. They risk creating another bubble that we can not afford as a nation.
I know you want to save the planet. Me too. But let’s not let the big boys take advantage of our sentiment.
Green Monster World, – a Cap City Comp.