While there has been debate in many markets about the pros and cons of residential leasing, it has been the leasing model that has been used in the majority of the residential solar installations nationwide for the past several years, forecasted to account for 68% this year by GreenTechMedia Research. Here in Washington State this has not been the case, because of the very carefully worded, complex and limiting state incentive legislation which has prevented systems owned by third parties, ie leased systems, from qualifying for our state’s Cost Recovery Program and its annual performance incentives.
Until very recently, we had very limited financing options to suggest for potential clients. If financing was necessary, it usually seemed like the best idea for people to refinance their house, since the interest rates have been so low, and that interest is then tax deductible. To my mind it also prevented people from borrowing more money than was reasonable, based on their financial situation. If they did not have equity in their house, perhaps they should address that issue prior to installing pv. However there were many potential clients who for some reason, reasonably, did not want to create or increase mortgage debt. The other financing options at that point were typical retail revolving credit like you might get at an appliance or audio/video store with higher interest rates from distasteful entities like GE Capital, which we would never offer. We will also not accept credit card payments. So we were usually stumped at this point.
All of that changed fairly recently with the availability of Energy Efficiency loans from Puget Sound Cooperative Credit Union. These loans are typically low interest (~4.5%), can cover various energy efficiency upgrades for the home including solar, and are not secured by the title of the house, but are only secured by the solar array itself. We are not involved in these loans other than helping provide information; we pay no fees nor receive any commissions.
When I speak with installers from other states, they are generally envious of the financing options we have here in Washington. Most of them are stuck offering leases that benefit the lenders more than the clients or installers, or have to pay fees to the lenders in order to offer low interest loans to clients. That’s why this article contains the “news” that new financing options in other states are now increasing their market share compared to leasing. http://www.greentechmedia.com/articles/read/Better-Cheaper-Loans-Challenging-the-Solar-Leasing-Model
So far this year, nearly a third of our clients have utilized PSCCU’s low interest loans and everyone who has qualified has been very happy in their dealings with this organization. Thank you PSCCU! http://www.psccu.org/efficiency.php#energysmart
Solar leasing companies are currently lobbying hard in Olympia for our state incentives to be opened up to their leasing models. Here at Power Trip Energy we keep an open mind and will evaluate any future available programs with bias towards our client’s best interest. In the meanwhile, we are very happy with the sensible low interest loans available to our clients.