Breaking Down Solar Energy Options

Cathy Allen

Many thanks to my readers!  I received several requests to summarize the difference between owning, leasing, or signing a power purchase agreement (PPA) for a residential solar system.  So here goes….

Owning A Solar System:

Solar power systems can cost $15,000 to $30,000 before any rebates and incentives.  Once installed, the owners receive rebates, tax credits and/or state renewable incentives that can reduce the total cost by 50 percent.  Most solar installation companies will manage all the paperwork and adjust the purchase price to reflect the net amount.

Maintenance

As an owner you will be responsible for the maintenance of your solar system. Through technology and sustainable design, solar system equipment is very durable and can withstand the elements. The maintenance on your systems comes down to the cleaning of the solar panels themselves. Dirty solar panels cannot effectively capture the sun’s rays to produce solar energy.  You can do it yourself–if you have the nerves. If that’s the case, many solar installation companies will train the homeowner on the proper and safe way to clean the panels, but only at your own risk.  Another option is to have your solar panels professionally cleaned for between $100 to $200 per cleaning usually once or twice a year depending on your location. Also, your solar system will come with warrantees on the system equipment components.

Solar Loans

Many banks are now offering tailored solar systems loans to homeowners with FICO scores 640 or above.  These loans are generally available for 10-to-20-year terms, with interest rates ranging from 3 percent to 8 percent.

Saving and Return on Your Investment

Typically, a solar system will save you between 40 percent to 70 percent on your electricity costs over the lifetime of your solar system, that is about 20 to 25 years.  The percentage cost savings depends on your property and also your state solar incentives.  In some states like Maryland, many solar systems owners receive free electricity annually.

Leasing or Signing a PPA (power purchase agreement)

Leasing and PPA are solar system options that are very similar when it comes to the benefits of using alternative energy.  In both options the solar company owns and maintains the system.  There is little to zero cost for installation. You save between 10 percent to 30 percent off the price you pay for your electricity. But, you do not get the benefits of tax credits or renewable incentives or rebates because you do not own the system.  Leasing a solar system comes with a 20-to-25-year contract with an option to buy in order to receive all those rebates, tax credits and state renewable incentives.  PPA has no contract, no option to buy and no incentives for rebates, tax credits or renewable credits.  PPA options are tailored to the middle-class and low-income families that own their homes to cut down on their energy cost.

Owning, leasing or signing a power purchase agreement (PPA) for renewable solar energy is a step moving forward in protecting our wallets and the environment.

Cathy Allen is an award-winning urban environmentalist, the co-creator of G.R.A.S.S. (Growing Resources After Sowing Seed) as well as chair of the “Grow-It Eat It” campaign. G.R.A.S.S. is an environmental entrepreneurial nonprofit program based on the fundamentals of gardening, agriculture and ecology. In conjunction with Baltimore City Public Schools, Allen’s campaign has planted over a half-million trees on the lawns of Baltimore City public schools.