by Nick Gromicko, CMI®
While the prevalence of solar energy steadily grows, many homeowners continue to shy away from the installation of photovoltaic panels due to their considerable upfront costs. Even though such an investment will likely turn profitable years down the road, not
all homeowners have the money to purchase their own solar panels. Knowing this, a number of entrepreneurial companies have removed a major roadblock to solar proliferation by offering to rent solar panels to homeowners who couldn’t otherwise afford to go green.
Although there are some differences between these rental companies in terms of what they offer, the basic idea is similar to leasing a car; you pay a deposit, sign a lease, and then pay a monthly fee. The rental company analyzes energy bills so that a solar array of appropriate size can be selected and installed. Each month, the homeowner pays the rental company for the energy they use. Any excess energy generated flows back into the power grid via the rental company who has purchased it from the homeowner in a practice called net metering.
Advantages of Solar Rentals:
- Homeowners get to participate in the generation of a non-polluting source of electricity.
- The only up-front cost of the panels is a deposit, which is usually between $500 to $1,000, depending on the size of the system, and the policies of the rental company. This deposit is paid back, with interest, when the contract expires.
- Renters are protected against future utility price increases. Suppose that in 10 years, the cost of grid electricity has tripled. Neighbors will suffer, but solar renters will be locked into their rate.
- Homeowners can terminate the contract and return the panels, if they want. They’d lose their deposit, but losses would be considerably less than if they had bought the panels, and later decided to switch back to grid power.
- Homeowners who wish to go solar are relieved from the hassle of obtaining permits, waiting for incentive rebates, dealing with engineering, financing, or any other concern typically related to the adoption of a solar system. The rental company takes care of almost everything.
- Excess power will be sold to the utility company through net metering and the revenue will go to the homeowner, not the panel rental company.
Disadvantages of Solar Rentals:
- The company, rather than the homeowner, receives tax credits for installation of the panels. These credits are considerable; the U.S. federal government offers a 30% tax credit, which can be combined with generous state incentives, as well.
- It is impossible to predict whether the company will stay in business throughout the term of the contract.
- No one knows what grid power will cost years from now. Renters will need to gamble that the price they are locked into will be lower than grid power.
- The rental company will not remove snow from the panels, so the homeowner will have to do it. Grid power will be the only option when snow, or anything else, limits the panels. Some companies are looking into heating units to keep the panels clear of snow automatically.
- Even as photovoltaic technology develops, renters will be stuck with their original panels. Solarflow Energy’s website states, “There are no provisions to upgrade solar equipment for existing customers as new technologies become available.”
- Roof work would require that the panels be temporarily removed. The homeowner may have to pay for this service, which will cost hundreds of dollars. The company CitizenRE offers one free removal and reinstallation for roof work.
- Relocation poses issues. The policy of Solarflow Energy, for instance, limits clients who wish to relocate to the following three options:
- terminate the contract and lose the deposit;
- transfer the contract to the new owner; or
- move the panels to the new location. The homeowner would have to pay fees associated with the removal, transfer and reinstallation on the panels. Also, the old panels may not be suited for the energy needs of the new property, which would require a new site assessment.
Currently, a handful of companies offers solar panel rentals in the 41 states where net metering is available. Some of these companies are listed below:
- CitizenRE. By far the most ambitious solar renter today, Delaware-based CitizenRE claims to have $650 million in investments, and predict they'll have 500-megawatt potential in a few years;
- SolarFlow Energy, a Minnesota-based program developed to serve the Minneapolis/St. Paul area;
- CT Solar Lease in Connecticut;
- SolarCity, serving areas of Arizona, California and Oregon; and
- Helio Micro of California.
Currently, solar panel rental is available only in states where net metering is available. In these 41 states, the amount of excess energy generated by the panels can be tracked and sold to the utility company. The states that do not currently offer net metering are:
- South Carolina;
- South Dakota;
- Tennessee; and
- West Virginia.
In summary, people now have the option to use solar-generated electricity without having to purchase solar panels. There are drawbacks to this choice, however, that limit its attractiveness, so homeowners and renters should research their options carefully before making a commitment.