How Does the Solar Lease Work? Q&A with Dan Yechout, Residential Sales Director with Namasté Solar
Q: Dan, how does the solar lease work?
A: Let me begin with how solar worked before the time of leasing. Prior to solar leasing options, if a homeowner wanted solar panels they would purchase all the equipment and have it installed on their home. Normally, the installation company has a warranty for the workmanship and the solar panels and other components have their own product warranties.
Typically, there is a 10-year workmanship warranty for the installation, the components have a 10-year product warranty and the solar panels would have a 25-year performance warranty
Q: So, how does leasing a system change things for homeowners?
A: The leasing company owns and operates the system and is responsible for all the cost associated with the system for a 20-year term. The homeowner no longer has to worry about the equipment and is only responsible for the cost of the solar power service. Our leasing partner at Namasté Solar is SunRun. Namaste Solar designs and installs the system. SunRun owns the system and leases it to the homeowner. With a lease, the homeowner is buying solar power, which is what they really want, rather than solar equipment.
Q: How does a homeowner know if there is a problem with the system?
A: SunRun monitors the performance of the system and will know if there is a problem. If there is a problem they will contact us and we will set up a service call by the Namaste Solar Service Team.
Q: How does a customer pay for solar power service?
A: The homeowner can choose how they’d like to pay for the solar power service, they can pay little or no money up front, and pay a monthly bill for the solar. This is like replacing their utility bill, but the advantage is that the solar bill is at a fixed, known rate for 20 years. They are no longer subject to rising and unpredictable utility rates. Or they can pre-pay for the 20 years of solar power at a discount price and never have another electric bill.
Q: What happens after 20 years?
A: After 20 years the homeowner has three options:
- Renew the lease on the system at a monthly rate that is guaranteed to be less than price of the utility power at that time
- Purchase the system at fair market value
- Have the system removed free of charge
Q: How rapidly is the technology for solar changing? Will a homeowner miss out if they get into a 20 year leasing situation?
A: It’s more likely they will miss out if they wait to go solar. Utility rates continue rise and solar leasing allows the homeowner to take control of their electricity costs today. Solar panel efficiency is increasing at a rate of 2% per year, which means you’ll be able to get a little more power on your roof ten years from now, but at the expense of ten years of utility bills. Most of the research is going into driving down the cost of solar panels. Currently there are local and federal incentive programs to reduce the cost of solar leases, and these incentives are on a schedule to decline as solar component prices decline. The end result is that the price of solar leases will be relatively consistent for the next several years.
Q: What can a homeowner expect to save on his/her power bill?
A: It depends on the home and electricity usage. If the homeowner has a solar friendly house and uses more than $80 of electricity each month, then they can go solar for free and save money from day one.
Q: Does a homeowner still benefit from local and federal incentive for solar if they go the leasing route?
A: Yes. If a homeowner purchases the solar equipment then he/she will receive those incentives directly. If the homeowner leases the solar power system, then the leasing company takes the incentives and creates an even better deal than the homeowner can get purchasing equipment.
Q: How does a homeowner benefit from solar panels during the winter, snowy months?
A: The solar panels will not work when there is snow on them. During those times, the homeowner will be buying power from local utility. The homeowner is guaranteed a certain amount of solar electricity production every year as part of the lease. If the system fails to meet the guarantee, SunRun pays the homeowner for the shortfall.
Q: How many solar homes are there in Colorado?
A: There are 8,000 homes that are within Xcel Energy electric territory and have had solar systems installed since 2006 as part of the Solar*Rewards program. Then you can add in the solar homes in other utilities and off grid, which totals a few thousand more.
Q: How does a homeowner benefit from choosing Namasté Solar as their installation company?
A: We have been Colorado’s leading solar company since 2006 because of the outstanding customer service we provide. We custom design every system to meet the customer’s needs, using only the highest quality components. We are 100% employee-owned, which means every employee of the company has a vested interest in the success of each customer’s project. We are a licensed Colorado electrical contractor with 21 NABCEP-certified solar PV installers, and all our work is done by our in-house crews.