Today over at Planting Money Seeds, there's a very good article about leasing solar power panels to save money on your electric bill.
This is a very smart thing to do in quite a few states with high electricity prices... BUT... we'll let's leave the big "BUT" for later.
The idea is this. You let another company put their solar panels on your roof and you pay less money for electricity. In a lot of ways, it's as if someone just offered to cut your electric bill in half. At least this is what happened in writer Rachel Gates' case.
It's a win-win, because you don't have to put down money upfront... and solar panels can cost tens of thousands of dollars. Even with subsidies my panels cost around $25,000. It's a win for the company leasing the panels, because they charge enough on the electricity they generate to make very good money on them.
When I first explored adding solar power to my house, I looked into leasing solar panels. This was based on an article by Evan from My Journey to Millions who looked into leasing solar panels as well. He reviewed the same company, Vivint, and decided against going for it. His reasoning was that saving $40 a month wasn't worth some of the thorny issues that come up if you decide to try to sell your home.
I think it's great to get both sides of the story, from someone who went for it and someone who didn't. In Evan's case, it was going to cost him 15 cents per kilowatt hour. In Rachel's case it was going to cost 11.5 cents per kilowatt hour. That's a big difference, and perhaps that's why it makes sense for Rachel and not Evan. I'm not sure how they figure out the pricing. It could vary by state or even based on the estimate of how much power they think your home will generate.
When I did my research into buying panels, the cost would be about 7 cents per kilowatt hour accoding to this awesome solar calculator. That's half of the average of Rachel and Evan's prices. Perhaps more importantly, that 7 cents stays that way for 20 years... while Vivint can raise the price 2.9% a year. Near the end of Rachel's contract, she could be spending nearly 20 cents/kWh. And while that will still likely be a bargain to what the power company is charging, it is certainly no match for paying 7 cents/kWh.
The "gravy" in owning panels comes in after 20 years. I don't know what happens with the Vivint panels after that time. I presume the agreement is over and they haul off the panels unless you want to extend it somehow. Even then, I bet they'd want you to enter into another agreement with the latest technology, which will surely be much, much then (solar power is advancing exponentially fast). My panels could provide power for 30 years. They may be less efficient giving me a price equivalent of 10 cents kWh, but that's still very, very good.
Perfect is the enemy of good. If leasing solar panels saves you good money, then go for it. However, I strongly urge you to look for the money to buy them outright, even if you have to finance them. It looks like the reason why Vivint is happy to lease panels is that they can do it at a price that makes them good money. If you have the means, why not keep the money for yourself?
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