D-FW homeowners find that leasing solar panels can make financial sense

By Teresa McUsic

tmcusic@savvyconsumer.com

Tarrant County residents are starting to let the sun shine in.

Solar panel prices have dropped 90 percent since 2000. Even with that decline, however, buying a residential photovoltaic electricity installation remains an expensive investment, even after the federal 30 percent tax credit.

Local residents are finding that leasing programs through TXU and now Green Mountain Energy can make financial sense. Those companies are especially promoting prepaid leases, in which the homeowner makes a single upfront payment.

"The Texas market is so ready for solar," said Eric Wittenberg, Texas regional director for SolarCity, a national provider of residential and commercial solar systems based in San Mateo, Calif. "It's been a deregulated market for a long time and the Texas consumers have become educated in shopping for electric plans and products."

For example, what was supposed to be four years of funding for solar panel rebates, offered through Oncor Electric Delivery, was used up in the program's first two years, Wittenberg said. SolarCity, which teamed with TXU Energy for its area leasing program, has a waiting list of 5,000 households in the Dallas-Fort Worth area that signed up for the program but were unable to get in.

Sixty percent of that rebate program was done on Tarrant County houses, said Chip Deaver, director of product innovation for TXU Energy. "The interest has been overwhelming," he said. "It's exceeded our expectations."

While the solar lease program no longer includes the Oncor rebate, which was based on the size of the installation, Deaver says it will continue and he expects it to remain popular.

"We think there is a market that likes solar and wants to lock in a portion of their electricity at a low cost for a long time," he said. "There's no rebate, but the program continues on."

Wittenberg said SolarCity lowered some of its costs to homeowners to make up for the end of the Oncor rebate.

Lease or buy

Green Mountain Energy introduced a similar solar lease last month to customers in Oncor's territory. It is a prepaid lease, which calls for the homeowner to make a single upfront payment.

"After 20 years, we would take it off the roof for free, or you could buy the array for market value or extend the lease," said Helen Brauner, senior vice president of strategic planning and marketing for Green Mountain Energy. She said the advantage of a prepaid lease is a lower upfront cost than a straight purchase.

For example, a four-kilowatt solar array costs less than $14,000 with a prepaid lease through Green Mountain, which already includes the tax federal credit, she said. At that price a homeowner is paying the equivalent of less than $60 a month for the system.

She said monthly lease payments on the same system for 20 years would run around $175, making the system cost $42,000 over its 20-year term.

SolarCity, still partnering with TXU, will now offer a three-kilowatt solar array on a prepaid lease for approximately $7,000 upfront. A five-kilowatt prepaid lease costs about $12,000.

SolarCity will also sell solar arrays outright, but for a higher tab, Wittenberg said. The three-kilowatt system would cost about $12,500, including the 30 percent federal tax credit, he said, and the five-kilowatt system could cost more than $19,000.

"A prepaid lease is the least expensive way to go," he said. Just like with an automobile lease, SolarCity estimates a value of the solar array at the end of the lease and subtracts that amount from what the homeowner pays.

The prepaid lease from both electric retailers includes installation, insurance, maintenance and a guaranteed performance level.

"The guaranteed performance gives us incentive to keep the system repaired as needed," he said. "We own it. If the system doesn't live up to our estimate, we'll write you a check for the difference."

Both companies also offer a free assessment to determine if your house is right for solar. Between 35 and 40 percent of homes are suitable for roof-mounted solar arrays, according to Environment America, an environmental advocacy group. SolarCity is also kicking in a free home energy-efficiency evaluation for those who sign a solar lease.

Utility savings

In return for the upfront costs, homeowners will realize monthly savings on their utility bills. The amount depends on the home's electricity use, the capacity of the solar array and how effectively it works, but utility bills can be cut by a quarter to a third, depending on the season, Brauner said.

Wittenberg estimates greater savings -- 60 to 80 percent.

Burleson homeowner Julie Weaver, who says she is a power miser in her all-electric home, leased a six-kilowatt array through TXU last July.

"Our bills averaged around $130 a month before the system," she said. "My April and March bills were around $39."

In addition, Weaver says she has received checks from TXU roughly every three months that ranged from $78 to $155 for excess electricity she returns to the power grid. In Fort Worth, April through August are the top months for solar energy, according to SunCap Financial, a solar leasing company based in Houston and a partner with Green Mountain.

Both TXU and Green Mountain offer power buy-back programs. TXU will pay 7.5 cents per kilowatt-hour, and Green Mountain will buy back power at 11.3 cents per kwh for the first 500 kilowatts, then 5.6 cents per kwh for anything over that.

You don't have to be a TXU or Green Mountain retail electricity customer to use their solar leases, but they do need to be your retail electricity provider for you to sell extra power back to them.

As to the all-important hail risk in this area, Wittenberg and Brauner say solar arrays typically can withstand hail damage. Weaver said she has been through three hail storms in the past month with no damage to her array.

"They told us the panels could take 1-inch hail coming down at 90 mph and it would not break," she said. "Besides, if it did, it's not our responsibility."

Teresa McUsic's column appears Fridays.

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