Solar: Buy, lease — or forget the whole thing?


It was hard to imagine a few short years ago.

Here in upstate New York, where it’s cloudy half the time, solar panels are taking off. Even though Congress just extended the biggest federal renewable energy subsidy for several more years, removing the urgency to ‘act now,’ many homeowners are embracing the idea of generating their own power.

If you do it right, it’s a win-win situation that may not cost you a dime. If you do it wrong, well…let’s make sure you don’t do it wrong.


Even deciding to think about solar requires are few first steps. If your electric bill is minuscule, like under $75 a month, it might not be worth it. If you live in the deep woods with your roof and property in year-round shade, forget it. And if you pay little or no taxes, you won’t be able to avail yourself of the enormous subsidies that make the numbers add up for buying a system. In that case, leasing will then be your best option.  But if none of those “stoppers” apply, and you like the idea of living more carbon free, and want to slash your utility bills, read on.

There will be major decisions. Like whether to put panels on your roof or on the ground.  Whether to lease or to buy. Whether to generate a little more electricity than you currently use so that you’re all set for electric plug-in cars. Or whether to go the other way, to a smaller and cheaper system, since you’ll replace your home’s incandescent bulbs with LEDs in a year or two, cutting your annual electric consumption by at least 10%.

First things first. If you have a sunny spot on your property or your rooftop  and you don’t find panels horribly ugly, your first step is to call a company that either leases or sells.  Here’s how each works.


Leasing the sun

Leasing is easy. It requires you to invest nothing. For our example we will use the largest company, Solar City, founded by billionaire Elon Musk. They’ve aggressively begun focusing on New York, and plan to build a major solar panel plant in Buffalo. If you look up reviews of them you’ll find terrible complaints and also glowing testimonials. We’ll cut through all the smoke and tell you how to have a good experience. When you’re finished, you can count on saving 20% off your electric bill, and a written guarantee that your price will not change for the next 20 years. And you will have not spent a dime.  But you’ll have to be careful.

Solar City’s business has doubled every two years and they frankly have some employees who shouldn’t be there. But if you get a good, knowledgeable person from the outset, someone who is high enough up their food chain to offer you their best possible deal, and will take charge of your project in a pleasurable way, that will make all the difference.  The person you want is Jack Millard at 916-740-3947. Everyone who’s worked with him loves him. He will promptly have a team analyze satellite photographs of your house to see if it’s a candidate. If it is, he’ll arrange to have an engineering team come over. They have equipment that tells them whether you get enough sun throughout the year. Your home needn’t be perfect, far from it. They will also analyze your electric bills going back several years. Ultimately, they’ll propose a solar system that generates somewhere between 75% to 100% of your needs. Unless you have a growing family or think you might someday want an electric plug-in car, it’s best if you choose a smaller system. That’s because if your usage should go down in the future, you’ll still be legally obligated to purchase all the electricity the system produces. You don’t want that to happen.

If you agree to their proposal, they will create plans and send them to you and also a set of blueprints to your town building department for approval. They handle all the bureaucratic paperwork. When it’s all cleared, they install solar panels on your roof.  Leasing offers several big advantages. No money is ever required from you. You start saving on your electric bill right away. The company owns the panels and will always maintain them. They even carry insurance on them. If anything breaks they will fix it. It’s pretty worry free.


Good deal or bad deal?

The deal you get can vary greatly. In the past four months, one customer in our area was offered a system from Solar City where the electricity would cost the same as what’s charged by the local utility Central Hudson — around 16¢ per kilowatt. The 20-year contract also specified a 2.9 percent annual price increase. The selling point was that local electric utilities seem certain to raise future rates far more than that, so that the actual savings would commence and then increase in the years to come. Honestly, not a particularly good offer.

But another Solar City customer in our region, for the same installation, was offered a rate 20% below what Central Hudson charges, namely a mere 13¢ per kilowatt. And the contract specified that there would be no rate increases for the entire 20 year contract.  Thus, in 10 years or 15 years when electric rates might well be double what they are today, this solar panel customer will enjoy huge economic benefits. And, again, with never any out of pocket costs.

So make sure you get their good deal and not their bad deal. The difference may have to do with who you talk to.

When figuring out what you currently pay with your local utility company, you’ll see all sorts of charges itemized, like fuel surcharge and so on. Just skip to the bottom line and divide by your kilowatt usage in that bill. For many in our region, it’s currently about 16 cents, although it varies from month to month depending on what the utility itself must pay for its power. With oil prices now so low, they may even be currently charging you less than 16 cents, but we all know that won’t last.

Your utility company also itemizes a service charge, which is about $25 a month for Central Hudson and NYSEG. This will not go away even when you generate your own power, whether leasing or buying. You still must pay this monthly fee. It’s fair enough, since your utility company must continue to maintain the lines and all the rest.

Caveats galore

In preparing this article, we spoke to six Solar City lease customers in our area and heard nothing but rave reviews. But be aware of a few potential negatives. If and when you ever sell your house, the buyer must be willing to assume the balance of your system’s 20 year lease. Solar City has a team dedicated to helping you do this. Their sales pitch is that any home buyer would, of course, want to get electricity at far below the going rate. Well, maybe. It’s also possible that a potential buyer doesn’t like how solar panels look on the roof. It may well limit the number of potential buyers for your house, just as a swimming pool might.

And what if your roofing shingles wear out and need to be changed? Since this is likely during the 20 year lifespan of the contract, Solar City won’t even proceed if your roof is too ratty. It’s one of the things their engineers look at. But know this: Their standards are low. They’re gung-ho on getting new customers. They’ve okayed projects where the roof’s condition was marginal, and clearly would need replacement in ten years or less. And then? They will charge $500 if your roofing shingles ever need replacement. For that fee, they’ll come and remove their panels, and reinstall them when the new roof is completed. In any case, Solar City likes roofs. They are not willing to construct standalone panels elsewhere on your property.

If all of this sounds attractive, and you don’t want to lay out one penny, and would like to save significantly on your electric bill and also help the planet, and want a zero hassle project, leasing is probably the way to go.


Buying solar

If you have a typical two-month electric bill of at least $150, where you’re using over 6000 kW per year, and pay enough taxes to be able to use the government write-offs, and have a sunny roof or a good enough spot on your property, you should know that the greatest financial benefit comes from owning a solar system outright.

Your system will probably cost around $31,000 whether it’s installed on your roof or elsewhere on your property. But with the current grants (roughly $3,550), and Federal tax credit ($8000) and New York state credit ($5000)  you’ll wind up paying just $14,000 out of pocket. That’s for a typical 7.5 Kw system, which will generate about 9000 Kw hours annually.

You must cough up real money. But here, unlike leasing, you’re not merely gaining a 20% reduction in your energy bill. Rather, you’re generating all your power and keeping the entire savings. Your Central Hudson bill will go to zero. Except, again, for that $25 monthly service fee.


It all works through “net metering.” Meaning, during the long-sun months of March through September, you’ll generate far more power than you’ll use, and the utility is required to buy your surplus production. Your meter will actually spin backward. Then at night and during the cloudy low-sun winter months, you’ll buy power from CH Energy or NYSEG, but you’ll do it by using up your credits with them. In theory and in practice, at the end of the year, you will have paid nothing for power. And, by owning the system, you will indeed increase the value of your home.

Ah, but how long will it take to amortize that $14,000 or whatever your personal system costs? Figure somewhere between nine and 12 years. Also, while panels don’t wear out and are warranted for 25 years, the inverter will eventually die, typically in 12 to 15 years. That’s a big waterproof box, usually mounted outdoors on a basement wall, which converts the solar DC to alternating current. Figure you’ll eventually need a new inverter for $2500. Add it all up and it’s probably something like 12 years before you get your money back. But from that point on, all your electricity is free forever.

Some might argue to wait, that solar panel technology will only improve. That’s true. Panels just three years ago were each generating 260 watts. Nowadays they generate 315 watts. At least, the high-end “monocrystalline” ones do. These days, you’ll need something like 25 panels. However, once you have a system that generates all your electricity, you’re set. It doesn’t matter how future technology improves. You’re already making all your power for decades to come.


Where to put them

If you don’t mind how panels look on your roof, and if it’s sunny enough up there, and especially if you have a south-facing slant, and if your shingles are in good shape and you don’t think they’ll need replacing soon, then it’s a no-brainer. There is no physical disadvantage to a roof-system if you’re leasing, because if they get snow-covered and don’t generate power for awhile, you pay nothing during that time. Your power production is continuously monitored: You can see the read-outs on your iPhone or tablet, and the solar leasing company always knows what it’s doing thanks to automated internet signals. They guarantee that if you ever don’t produce power, you’re simply back to buying your local utility power during that interval.

But owning your own rooftop array might change the equation. If your roof has a steep pitch, great: The snow will slide off the slippery tempered glass panels. But if your roof has a gentle pitch, you might be snow covered for a period and generate zilch. Do you ever want to go up there and clear off snow with a roof rake? Probably not.

If you have enough property, they can set up an array in any sunny spot, and dig a trench and run their cables to your home. Done this way, the panels are always sharply angled to maximize solar production, which is also plenty of pitch so that snow slides off. Result: zero maintenance.

As to who to use, a growing number of solar companies serve our region. A few are national. Solar City will agree to engineer and construct a system that you buy, but their prices are 40% to 50% higher than local companies charge, and, again, they only do roofs. However, unlike local companies’ 10-year warrantee, they stand behind everything for 30 years, including replacing the inverter when it goes.

If you do choose to buy, though, here’s what my research has shown. I’ve gotten first-hand reports that included generally good reviews about two regional companies, and have insufficient information about three others. One that has earned consistently high praise is SolarGeneration. They’ve installed solar generation systems for the town of Woodstock, and deserve extra praise for doing charity work. They’re on Route 28 outside of Kingston. Speak to the owner, Todd, at (845) 679-6997. Don’t be thrown by his detached demeanor; his outfit has an excellent reputation.

This doesn’t mean that other companies are not good, too. A Red Hook colleague is thrilled with the system she bought this fall from Sungevity, a national outfit. Tom Gottsleben and Patty Livingston in Saugerties are very happy with the enormous 106 KW solar electric system installed earlier this year by Hudson Solar. Do your homework and check references.


Huge tax break

Congress just unexpectedly agreed to a major extension of the current generous federal solar subsidies. As a credit, you take the amount directly off your tax payment, rather than as a deduction from your taxable income. You can claim the credit for your primary residence, a vacation home, and for either an existing structure or new construction. The state credits can be taken over a period of up to five years.

So, first see if you pay enough in New York and Federal taxes to avail yourself of the subsidies. If you pay no taxes, then all you’ll get is that 40 cents per watt NYSERDA grant. If that’s the case, a typical system shoots up to an out-of-pocket cost of around $27,000, plus or minus a few thousand. Then the pay-back time may exceed 20 years and it may no longer make sense to do it.

We say “may” because if utility rates zoom sharply upward in the next decade or two, the numbers change and the pay-back is so hastened, a solar system may be rational even if you cannot fully avail yourself of government credits. Or you may care about the environment so much, maybe your personal economical benefits are secondary and you want to do it anyway.

As for the notion of totally cutting the cord to the electric utility and avoiding that monthly service fee — it’s not practical. Maybe someday, but not now. Giant batteries that take up a chunk of your basement are currently available for thousands of dollars, and then need to be periodically replaced. Although being physically independent of the grid is possible, it still lies in the future unless you have deep pockets.

The bottom line is that leasing means zero outlay and immediate savings. But if you have the money to spend or don’t mind borrowing it, buying panels will save you significantly more in the long run.

Whichever you decide, you’ll be joining a rapidly growing group of home owners in our region who get their energy from the sky. Each square yard of your roof the size of a wall poster gets hit by 1000 watts of Sun power.

It’s free energy. We might as well use it.

There is one comment

  1. Jeff Potent

    Can you provide more information on the challenges and opportunities of buying a PV system in our area, versus leasing.

    Thank you.

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