California Solar Company Starts Leasing Program

SolarCity, a California solar company may have hit upon an inventive way to sidestep the initial costs of a solar power system for most homes. Using the state incentives offered in California, along with a federal tax credit, and a financing program backed by Morgan Stanley, Solarcity may possibly have found the ‘in’ for many people to put their home on solar power systems.

I can’t say that i’m completely sold on this, but its not a terrible idea either. Here’s why I’m not really excited about this:
1) These appear to be grid tied systems. Not great, but batteries would be better imho.
2) If you have a home that has something like a $225/mo. power bill, you’ll need about a 4kw system. That will normally run you around $40,000 or so. A system this size with the Solar City program will initially cost $2000, and lower your bill by about $150, with a monthly payment back to Solar City for $125. They do take care of monitoring and maintenance, but you can do your own monitoring, and maintenance may or may not be a monthly thing. I haven’t heard of anyone requireing monthly maint. on a solar system unless they are on battery, and its technically the batteries that require the maintenance. So for all the ruckus, and solar panels being put on your home, the payments go up about 3.5% annually, probably lower than fuel, you don’t own the system, and you save a big whopping $25 on your power bill. You can do that by installing flourescents and not running the dishwasher every night.

In the same state of California, the state and local incentives will bring the price of purchase/installation down by about 30%. For the same 4kw system, thats around $12,000, bringing the total price down to $28k. There are loans available called EEM’s. These are Energy Efficient Mortgages, and they can be used as a refinancing tool or as a source for money to do energy efficient upgrades. If you refinance with an EEM (which even in todays market, mortgage brokers love them) the repayment gets rolled into your mortgage payment, which only really goes up by about $65 dollars, your debt to income ratio goes down, increasing your credit score, and because you ‘own’ this, you can have your home reappraised, with the brand new power system on it and the value of your home increases.

In a nutshell:

With SolarCity’s Plan
$2000 up front
Save Approx $150/mo.
$125/mo. for monitoring/maintenance
Don’t own system.
Total benefit to you: $25 savings and maintenance you will probably not need.

Using EEM’s
Nothing up front
No monthly fee
$165/mo. saving
Increase credit score
Increase Equity
Increase resale value.
Total Benefit to you: $165/mo saving, increased credit score, increased equity and resale value of home.

(The Appraisal Institute states that the value of your home goes up by approx $10,000 for every KW of power added via a renewable energy system)