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A Plethora of Solar Options 1

Note: This post is Part One of a series on solar options. Here we compare the basics of solar leasing, purchasing, and gardening. Part Two keys in on the financial aspects of the options. Part Three summarizes the lessons learned from the first two posts.

What makes something a ‘plethora’? I hope many of you will harken back fondly to the movie The Three Amigos, in which trusty sidekick Jefe tells head honcho El Guapo that he has arranged a ‘plethora’ of pinatas for El Guapo’s upcoming 40th birthday bash. El Guapo, moody from a recent romantic rejection, angrily questions Jefe’s understanding of the word ‘plethora’.

After reviewing the evidence, I feel comfortable stating that there are a plethora of solar options available to Colorado households. A household can: 1) purchase an array with cash, a traditional bank loan, or a loan through a solar provider (aka a “solar loan”); 2) lease panels through a solar provider; or 3) subscribe to a community solar garden (CSG), which in itself may offer options to purchase, lease, or pay-as-you-go for your panels. And although not every option is offered in every utility service territory, it’s worth understanding what’s out there whether you’re going solar now or in the future.

In terms of initial appeal, many have chosen the lease option because you can work with a single solar provider who will take care of the entire finance, installation, and system monitoring process from soup to nuts. Having the control that comes with ownership is a different kind of initial appeal, and recent solar loans also allow for soup-to-nuts service provision. Still others will prefer to have a system located off site in a CSG whether because their site isn’t amenable to good solar electricity production, they rent, or they simply don’t want to deal.

Initial costs can range from a zero money down solar loan to a full cash purchase for system owners. These costs tend to be zero or minimal for lessees and can vary tremendously for CSG shareholders. Federal tax benefits only get passed on to system owners, with some CSG share owners having successfully argued for tax credits in the past.

On the issue of system maintenance, it’s first important to recognize that basically no maintenance is required for solar PV arrays. The main exceptions would be an inverter replacement should it fail say in Year 15 or rare hail damage to your panels. Solar leases and loans generally provide system warranties for the duration of the lease or loan period. Owning a system through a traditional bank loan places the burden of maintenance on the system owner whenever manufacturer warranties end. In each of these options, hail damage to panels must be covered separately through a homeowner’s insurance policy. With a community solar garden (CSG), the array is typically maintained and insured by the garden developer.

As far as term, most leases end after 20 years, solar loans generally range from 10-20 years, traditional bank loans range from 5-15 years, and CSG subscription periods generally range from 20-25 years. So while lessees and CSG subscribers would need to make some sort of additional payment after their term ends in order to continue accessing solar, owners will have paid off their loan and can enjoy the benefits for as long as their system lasts.

When it comes to moving out of your solar home, transferring a lease to new homeowners can be pretty seamless but can also incur complications if they don’t meet certain credit scores. It would cost money to bring your system with you to your new home, and that would only be possible if you moved within your existing utility’s service territory. Some solar providers may allow you to purchase the system at “fair market value”. CSG subscribers who move outside of their utility’s service territory* would be responsible for selling their share in a private transaction, although a CSG waiting list may ease this burden. Owners of solar homes simply add the value of their system to their asking price and reap any benefits they can get from that.

One detail that some find important is the matter of Renewable Energy Credits (RECs). A REC is proof that renewable energy was put onto the grid, and each REC equals one megawatt-hour of electricity. It represents the “environmental attributes” of a renewable energy system in order to avoid double counting toward legislative mandates. If you’re interested in being able to claim that your solar array is reducing your specific carbon footprint, then you technically need to be in possession of the RECs. Leases and most garden shares will allow you to reduce your electricity bill, but the owners of the systems hold the RECs and hence can claim that they – not you – are generating renewable energy. Owning a system, on the other hand, allows you to claim the RECs. Although there is currently not an active market for trading RECs in Colorado, it is at least conceivable that RECs may have some monetary value in the future.

Stay tuned for Part 2’s deep dive into the financial comparison of leasing, purchasing, and gardening, and leave your thoughts and questions in the Comments!

* For gardens in Xcel or Black Hills territories, the move must also occur within the same county or to a county adjacent to the garden.




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