Prepaid Solar Leases (2012~30)
One and done! We hear that all the time at SkyPower. “I want to pay for my panels and never think about it again.”
You can do that. It’s called a “One-Pay” lease or sometimes a “Prepaid” lease. There is NOTHING wrong, financially, with a One-Pay Solar Lease. If you have the cash and really hate the idea of the bank making money on your money, then go for it. It’s a perfectly acceptable form of solar financing and we do it all the time.
Why would you go with a One-Pay Solar Lease rather than simply buying the thing outright? The answer is depreciation. The bank gets it and you don’t … and it’s a lot of money. The depreciation allowance on your solar array could be $10,000 or more. This is an investment, IRS thing that you don’t get if you buy the solar panels yourself. Sure, there are plenty of tax goodies that you do get, but this is not one of them and it’s actually the biggest. If you “lease” the system, the bank gets it and will share some of this with you. Expect something like $2,500 or more in cost reduction between a One-Pay Solar Lease and a single pay purchase. Unless you hate the banks and are willing to pay for your feelings, leasing solar panels (even a One-Pay Solar Lease) is a very good deal for them and for you!
That said, we don’t think that One-Pay Solar Leases are the best way to go solar … a good way, but not the best and here’s why:
• Would you prepay your electric bill for the next twenty years? No … so why pay for your panels in one shot when you don’t have to?
• The actual savings is really minimal … maybe $8/mo. It’s better than nothing, but not much better.
• If you sell your house in the next ten years, you’ll get that money back anyway and not have to shell it out now. It’s called a “Solar Flip.” Check out our blogs on that.
• You must have something better to do with your money. If not, well then, okay do it … otherwise, pay for your panels the same way you pay for power … monthly.
Do the math and play with all the various scenarios and you’ll see what we see. Lease your solar panels … and do it with the lowest starting payment you can. Keep your savings or use them as you like. You will be money ahead each and every month that you own your house and end up with the same savings anyway you do it … so why not do it with lower payments today. Tomorrow will certainly come and you will save then, too … but even with higher payments, inflation will make them worth less so why not have the most money now.
When it comes time to retire, if you still have the house (or another one with solar panels), your cost for power will be next to nothing because even a monthly-pay lease will end and then the solar power is free forever.
That’s what we think … but remember, the only mistake you can make is to let the power company make power and sell it to you at a profit. Going Solar is smart … no matter how you do it.