Solar leasing has exploded onto the scene and has quickly become the finance method of choice for residential solar electric systems all across the US.

Simply put, the solar lease provides the benefit of a lower electric bill with little or no up-front cost to the consumer, and when executed properly the lease payment should always be less than what the solar electric system offsets on your electric bill each month.

Leasing terms and conditions may vary slightly depending on the contractor you’re talking with, but generally all solar leases are structured similarly. Most all solar leases have the following terms:

1.)    Term Length: 15 to 20 Years

– A standard solar lease is a 15 to 20 year lease. Most solar leases are transferable to the new homeowners if you move before the lease expires.

2.)    Annual yearly increase in lease payments: 0% – 4.5%

– When negotiating with your contractor make certain you discuss the annual rate at which your solar lease payment increases. It is negotiable!

– If you’re soon to be on a fixed income I would recommend a lease with a 0% rate escalator so the payment on your lease never increases

– If you want the lowest initial payment possible use the 4.5% rate escalator. Choosing a 4.5% rate escalator will result in the lowest initial monthly payment but may cost more over the life of the lease agreement.

3.)    Purchase Options: Year 7 and Year 20

– If you want to end the lease early and purchase the system for an extremely discounted price, you can purchase the lease out on years 7 and 20.

One of the greatest benefits of being in a lease agreement is the leasing company will guarantee your systems energy output and they’re legally obligated to back that claim with their wallet.

Before entering into the lease agreement, you will know what your systems expected power output is and if your system does not produce that amount, the leasing company will pay the homeowner per kilowatt hour at a pre-negotiated rate ranging from $0.11 to $0.30 per kilowatt hour.

Solar leasing is not as intimidating as it may seem and as electric utility rates continue to climb at 6.7% per year, there has never been a better time to lock in a steady monthly payment. The federal incentives that help offset the costs of the solar lease are set to expire in a few years. Contact us today to see how we can help you gain energy and fiscal independence.

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