There are several hidden costs associated with solar leases that you should be aware of before signing a contract:
- Escalator Clause Increasing Payments: Most solar leases include an escalator clause that raises your monthly payment by 1% to 5% annually, often around 3%, which can outpace your local electric rate increases over time.
- Dual Monthly Payments: In some months, especially when solar production is low or electricity use is high, you may still receive a traditional utility bill alongside your solar lease payment, effectively paying twice in those months.
- Cancellation Fees: Ending a solar lease early can incur substantial cancellation fees, sometimes as high as $20,000.
- Transfer Fees When Selling Home: If you sell your home, you might need to pay fees to transfer the lease to the new owner, and the new buyer must qualify to assume the lease. If the buyer does not want the panels, you may face costs to move the system or pay cancellation fees.
- Roof Replacement and Damage Costs: If you need to replace or repair your roof, you may be responsible for removing and reinstalling the leased panels, potentially at significant expense. Improper installation may also cause roof damage, which could become your liability.
- No Eligibility for Tax Credits or Incentives: Because you do not own the panels in a lease, you cannot claim federal or state solar tax credits or other incentives—the leasing company benefits from those instead.
- Potential Difficulty Selling Your Home: Homes with leased solar panels can be harder to sell because buyers must qualify for the lease or deal with lease transfer fees, reducing the pool of potential buyers and complicating the sales process.
- Increased Insurance Costs: Solar panels may increase your home insurance premiums, and damage to the panels may not be fully covered, adding to your potential costs.
- No Added Property Value: Unlike owned solar panels, leased systems generally do not increase home value because the panels are not owned by the homeowner.
- Potential for Limited Long-term Savings: Since you never own the system, you may not achieve the highest long-term savings compared to purchasing solar panels outright.
In summary, while solar leases offer no upfront cost and lower initial monthly payments, be prepared for escalating costs over time, possible substantial fees if you move or cancel, maintenance and roof-related expenses, and challenges when selling your home. Carefully reviewing the lease contract and understanding these potential hidden costs is essential before committing.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/are-there-any-hidden-costs-associated-with-solar-leases-that-i-should-be-aware-of/
