Ways To Go Solar

This article was taken from MarketWatch and written by Bill Sanderson. Read full article here http://www.marketwatch.com/story/want-to-go-solar-buy-the-panels-2014-09-15?page=1

Want to go solar? Buy the panels

3 ways to convert your house to solar energy

Rising energy prices and falling costs for electricity-generating solar panels make rooftop solar installations a good way for millions of American homeowners to slash their electric bills.

Homeowners are catching on to the idea: A recent Morgan Stanley report found that solar electricity generating capacity grew more than nine-fold in the U.S. from 2009 to 2013. Most of that growth came from home solar installations.

But with home systems’ upfront costs running $30,000 to $40,000 or more, the solar industry has had to find ways to make them easily available to cash-strapped consumers. If you want to go solar, here are your three options.

Leasing

Leases are now the most popular way for homeowners to get solar on their rooftops. GTM Research says 66% of home solar setups are owned by someone other than the homeowner — which usually means they are leased.

Home solar companies like Solar City and Sunrun market leases as an alternative to electric bills. Their pitch is simple: With a lease, the combined bills from your solar company and your electric utility will be much less than the bill you’d get if you only bought power from the utility.

“All you have to do is sign a document,” said Vikram Aggarwal, CEO of EnergySage, an online company that helps consumers figure out the best way to buy and finance their systems. “The solar company will come up and put in the solar panels. In most cases, you will not pay anything up front.”

Solar leases usually run for 20 years. They include promises of maintenance and monitoring meant to assure homeowners that their systems are working properly and that they don’t have to worry about their upkeep.

Sunrun CEO Lynn Jurich and business partner Ed Fenster got the idea of leasing solar to homeowners back around 2007, when they noticed that big businesses like Wal-Mart WMT, +1.53% were leasing systems for their roofs. They thought leasing would also work for residential utility customers.

Their ideas encountered resistance from homeowners who would rather own the panels. “We spent a couple of years convincing people that consumers do want to purchase the power, and they don’t want to purchase the panels,” Jurich said. She added: “Solar as a service is really the right term for this.”

Typically, people who lease systems cut their power bills by 15% to 30%, Aggarwal said. But he believes consumers can save even more by buying their systems, either by borrowing or paying cash.

Financing

Banks are starting to offer attractive loans to people buying solar electric systems, Aggarwal said. He believes financing costs are low enough and the advantages to owning your own system usually make buying a better deal than leasing.

“When you buy the system, the returns may be such that the system pays itself off in between five to seven years,” Aggarwal said.

If you finance, do the math carefully. Chip Azano of Melrose, Mass., is buying a solar system for his 3,500-square foot home with a total price of $60,000. After state and federal tax credits, he estimates his net investment will be around $39,000.

Azano, a lawyer, says the cost of financing his 10-year loan will be about $353 a month, roughly $100 more than his current electric bill. Counting the interest, the total cost of the system will be about $45,000.

But his system will last a lot longer than 10 years — his installer expects it will produce power for 25 years, cutting the Azano family’s utility bill over time by $117,000.

The numbers work out even better if he pays off the loan early, Azano says. He and his wife Elizabeth — who have two children, one a newborn and the other 4 years old — decided buying and financing the system will save more than a lease. “If we were going to put the system on the roof, we wanted to make sure we were capturing all the upside,” he said.

Outright purchase

Ed Reeder crunched the numbers with EnergySage’s help and decided paying $30,000 cash for his new solar system was the best choice.

Reeder, a retired software writer who lives in Granite Bay, Calif., calculated that with the up-front payment, his system will produce electricity at a cost of about 6 cents per kilowatt hour — just 20% of the roughly 30 cents per kilowatt hour he pays PG&E, his local utility.

Under a lease, Reeder would end up paying around 15 cents for every kilowatt hour the system produces. That’s not bad compared with PG&E’s charges — but Reeder realized that paying cash for his system would save him a lot more.

He saw other disadvantages to a lease. Under the 20-year deal, his leasing company, Solar City, would have increased its monthly charges 2.9% each year, so that by year 20 he’d be paying around 27 cents per kilowatt hour. Reeder guesses PG&E will raise its charges even more than that. But buying the system outright kept the cost at around 6 cents per kilowatt hour year after year.

Also, Reeder and his wife Kathy decided a lease would get in the way of their plans to sell the house in a few years. “If I sell the house and the guy who buys it doesn’t want to assume my agreement, that’s too bad — I’m still on the hook for the 20 years,” he said. “And why would someone assent to an agreement on equipment that’s 10 years old?”

Solar City says on its website that if you move, a lease usually can be transferred to the new homeowner. The company will also arrange to move your system to your new home.

Bottom line: Read up and shop around

“Always get quotes for multiple options,” said Aggarwal, whose website lets homeowners solicit bids for solar panel installations.

If you choose to buy, he said, spend a little extra on a service that remotely monitors your system to ensure it’s working properly. It’s also worth checking up on the warranties offered by installers and panel manufacturers — though you’ll probably have no problems. “Solar photovoltaic systems are quite durable. There are no mechanical or moving parts,” he said.

Solar industry leaders are convinced sales are about to take off. “We look out and we see that there are still only a few hundred thousand homeowners with solar,” said Jurich. “But we can save money for 20 million households. It’s incredible.”

Find this article written by Bill Sanderson at http://www.marketwatch.com/story/want-to-go-solar-buy-the-panels-2014-09-15?page=1