Mechanics fo leasing solar panels and third party ownership

Repost from Solar Professional by Gave Davis and Ben Peters

It was not technology that transformed solar power in the US but the financing scheme that provided ease of ownership - solar leasing.  The advent of high voltage inverter was the last of the technological innovation but it was leasing that was industry changing event.

The scheme was started by Sunrun, a start up of two business graduates from Stanford, Lynn Jurich and Ed Fenster who saw that the 3 obstacles to solar industry for residential use were:   money, money, money.

Leasing works this way:  the lessor uses his equity, his tax credits to purchase the solar on behalf of the residential owner and lets him use the unit with little or no up front cost.  Under this model, the lessor receives the tax credit and the depreciation.  The lease works on a 20 year plan and lessor has operating and maintenance plan for the lease.  The options at the end of the lease include:  renewal, purchase by the lessee, or removal of the unit.

Monthly payment plan.  The lessee agrees to pay for the electricity generated by the system at the rate equal to or lower than the grid prices.  This type is more beneficial to the lessor in case the utility increases the electricity rates. Typically a 20 year plan too.

Prepaid plan.   The lessor pays for the 65% cost of the lease and does not pay until the end of the lease.  This works well for retirees.