When a homeowner buys a solar system or when a solar company installs a system on your home the federal government issues a 30% tax credit rebate based on the quoted price of the system, sounds fair right? Unfortunately, solar leasing companies have found a loophole to exploit this government program while simultaneously hurting the entire solar industry while squandering tax payers dollars. In the residential solar sales market, the price that a solar system sells for is dictated by the economic laws of supply and demand, in order to stay competitive solar companies must sell their systems at a similar price point to other solar companies. However, because solar lease companies do not actually sell their solar systems but rather lease them to homeowners they can quote the value of their system as essentially whatever price point they want.
For example, if a homeowner purchases a 10kW solar system for $40,000 they will receive a federal tax credit of $12,000. On the other hand, with a solar lease, the homeowner does not receive any federal tax credits for their system, instead the solar leasing companies assume the federal tax credits and in turn leases the electricity generated by the solar system to the home owner at a discounted rate (compared to the rate of the electric company). So far the aspects of leasing and buying solar systems are not problematic, the problem arises when it comes to the valuation of the solar system. Compared to the above example of a homeowner buying a 10kW solar system for $40,000 a leasing company can value the same 10kw system they would install on your home at $70,000 because of the fact that it will not impact the rates they are charging the home owner. Attached below is a graph illustrating how solar leasing companies over value system costs as compared to the true market value of purchased solar systems (and things have only gotten worse since 2011.)
Ultimately the problem is that the federal government does not have a cap on the price per watt that a solar company can charge for a solar system, so while the price of solar systems bought from a solar purchase company is dictated by the free market, lease companies can overvalue the systems they install and in turn receive artificially inflated government rebates. At the end of the day because of the price manipulation being enacted by solar leasing companies they will receive a federal rebate close to twice the federal rebate a homeowner receives for the same exact size solar system. This price manipulation by solar leasing companies is not only bad for the federal government and taxpayers, it is also bad for the entire solar industry because leasing companies are rapidly depleting the pool of federal money designated to incentivizing solar. The moral of the story is that while many people think solar leasing companies are helping the solar industry by increasing the number of homes with solar, they are actually doing more damage than good to the industry by exploiting generous government rebate programs and wasting taxpayer dollars!
For more information on solar panel installations for residential and commercial use contact GreenLeaf Solar at (631) 509-1747 today.