Solar Equipment Leasing:
The 411 On the Other Side of the Sun
It’s in the news, on your street, ringing your phone and knocking on your door. Come on folks, pick up your feet and dance to the solar beat! Solar! Solar! Solar! We want solar!
The Sunshine State has been burning under the intense rays of the utilities power for decades but it seems that we’ve finally got the sun block that we’ve so desperately needed. By this point most Floridians have heard of going solar unless you’ve been living under a palm tree of course. The conversation is heating up and renewable energy has been thrust into the spotlight here in the Sunshine State. Either you’ve done it because you’re environmentally conscious, fiscally conservative, a combination of both or perhaps your still teetering on the edge of your beach chair. Either way, the proliferation of solar adoption in Florida has finally reached a point where you have one of two choices: continue to pay a historically rising and inflating electricity price without any kind of ROI or you invest your hard earned dollars into the power of the sun and use Mother Natures raw power as an asset instead of suffering at the hands of a liability.
But before we dive into the nitty gritty, where does Florida sit in regards to solar development? Surprisingly, 2017 marked the first year that Florida cracked the top 10 on SEIA’s list for solar development coming in at number 10. A metric that many skeptics and non-believers, on a certain side of the meter, thought would never happen because of the chokehold that these monopoly utilities have had. *Cue a greedy sinister chuckle.* So it appears that the landscape is changing, and with it, your choices.
Up until this point, you had three options for going solar here in Florida. It was either an outright cash buy, financing the system cost through a myriad of available loan programs, or you watched your neighbors from down the street bathe in the earthy crunchy money saving goodness leaving yourself wondering what you were really missing out on. Could the hype possibly be real? You betcha!
Fixed electricity cost. Check. Long term savings. Check. Predictability in an unpredictable power market. Double check. Coupled with the available 30% ITC, solar was and is a no brainer. However, solar loans and cash purchases have been left to those with the ability to take advantage of them. People with good credit, liquid cash, and a federal tax income appetite making them eligible for the Investment Tax Credit have been the only ones eligible for solar here in this state. So what about everyone else? Is there no hope for a program that makes it easier to take advantage of the wonderful opportunities solar has to offer? The future of solar in Florida has been looking dark for quite some time with nothing but stagnant growth outside of the utility sector. But wait a hot minute! Do I hear the distant hoof beats of another cowboy galloping into the Wild Wild West here in Sunshine State? I sure do.
Enter the Solar Equipment Lease. Unlike its cash and loan counterparts, the solar equipment lease is in fact just that, a lease on the solar equipment required to produce electricity from the sun. Now notice how I said it’s a lease on solar equipment and not on electricity. The verbiage is penciled that way for a strict reason and it has to do with Florida law regarding the incumbent utilities already in place. Back in 1988, the Florida Supreme Court ruled that the sale of power to a retail customer is the sole right of the local utility and no one else. This effectively rendered the solar lease or power purchase agreement ILLEGAL *collective gasp* and prevented Florida from really ever getting off the launch pad in terms of solar capability. Since then, purchases and loans have been 100% of the market and without any of the nice state incentives that places like Massachusetts or New York are afforded, this has made the viability in Florida extremely tough. Nevertheless, we have continued to muscle through the political red tape and have slowly crept up on the installed capacity list. But now, we have a new player in the game and its going to help put Florida on the map just as it has with some of the top states in the country.
So now you’re saying, “Ok this sounds interesting. Tell me more good sir.” I thought you’d never ask.
The solar lease offers the customer the ability to go solar without any money upfront and practically no skin in the game. Unlike a loan or cash purchase, you’re not required to take out a large sum of money and there’s no requirement for a 30% ITC. The company who offers the solar lease recoups the 30% ITC on your behalf and uses that tax savings to offer you a low cost method for going solar.This is a great option for folks who don’t have a tax liability such as retiree’s, who don’t want to take a loan out, or those who aren’t looking to make a large cash purchase. Power generated from the equipment on your roof will offset the energy you’ve purchased from your utility. The payment to the solar company who leased you the material will closely mirror your current utility bill or in the most ideal situation, be less than what you’ve historically paid.
The lease is usually structured in such a way that the monthly payment is made in fixed payments and the agreement is typically 20 years in length. Monthly savings are immediate ranging from $20-$40 depending on price per kWh. Should you decide to move during that time period, like a loan, the agreement is transferable to the next homeowner. Most major mortgage companies have no stipulations against solar leases rendering the transfer process easy. If a transfer isn’t desirable than the lease can be paid off without penalty usually using the proceeds from the sale of the home. Better yet, at the end of the agreement or at a set year, you have the option to purchase the depreciated value of the equipment and make it officially yours should you decide thats the best choice.
Overall, the Solar Equipment Lease offers another excellent choice to take advantage of what solar has to offer. Long term savings will not be as lucrative as what a purchase or solar loan will yield, but the ease of access certainly rivals those programs. Should you have any questions on what the best choice will be for you and your home, please call us and we will be happy to point you in the right direction!