Google and SunPower pump $250 million more into residential solar leasing
Google is one of the leading corporations in the US for investment in renewable energy. On Earth Day (yesterday), it announced its 15th renewable energy investment, the purchase of a gigantic 407-megawatt wind farm in Iowa. Just one day later, it just announced its 16th renewable energy investment, a $100 million investment in residential solar leasing.
This is not the first time Google has invested in residential solar leasing. In 2011, it invested $280 million in partnership with SolarCity. This time, however, the partnership is with SunPower*, which is investing another $150 million itself.
The story with solar leasing is rather simple: instead of buying their own solar power systems, customers have a solar company (e.g., SolarCity, SunPower, Sunrun, Sungevity, Vivint Solar, etc.) pay for the installation of a solar power system on their roof and then pay that solar company monthly for the electricity it produces. Often, this means a homeowner can go solar for $0 or close to $0 down. The solar companies generally aim to make it such that a homeowner pays less monthly for their solar electricity than they would pay to their utility for the same amount of electricity. Payments rise over time, but so would electricity rates, and the projected long-term savings are generally in the tens of thousands.
If you need to go through that one more time to understand it, here's how Google explains it: "Essentially, this is how it works: Using the fund ($100 million from Google and $150 million from SunPower), we buy the solar panel systems. Then we lease them to homeowners at a cost that’s typically lower than their normal electricity bill. So by participating in this program, you don’t just help the environment—you can also save money."
I've been covering solar energy for a long time and can tell you that there are a lot of outspoken people who are critical of the solar leasing model. So, really quickly, I'm going to cover the pluses and minuses here.
If you buy a solar panel system with cash, you end up with much larger long-term savings. However, that also means that you must have the amount of cash needed (generally tens of thousands of dollars), and that also means that you are foregoing the option of investing that cash elsewhere (where you might get even more money in return than from investing in solar power). I do think buying yourself is a good idea, but for those who disagree or who don't have tens of thousands of dollars lying around, there are generally two remaining options: solar leasing (described above) or getting a loan from the bank to buy a solar panel system. So, which is better?
For a long time, I thought a solar loan would beat solar leasing in almost every situation, but I decided in February to test my hypothesis with the most advanced "instant calculator" for solar that I'm aware of. I ran the numbers for actual homes in 10 major cities where solar leasing companies were present. Interestingly, I found that it was a dead tie. In terms of 20-year savings, a solar loan beat a solar lease only 50% of the time. Here are results for just 2 of the 10 homes (the first one in Albany, NY, and the second one in San Jose, CA):
I was very surprised with the results. For people who don't want to or can't put money down, a solar lease may actually be your best option. However, it's clear that you really need to get a solar estimate in order to do so. (You can get started with that by clicking here**).
Other pluses from solar leasing include not needing to figure out all of the tax stuff (the solar leasing company does that), not having to worry about maintenance or monitoring, and not really having to do anything other than continue paying your bills and save money. Minuses include the fact that you won't own the solar panels at the end of the lease term (but they will probably keep producing electricity for decades to come) and having to get any new homeowners to take over the lease if you decide to sell your home (probably not that difficult to do, but something to consider).
Again, the best way to really figure out which solar options is best for you is to get a quote from as many potential providers as possible and then run the numbers the best you can. If you have any more questions about that, feel free to drop us a question in the comments or send me a tweet.
*I own stock in SunPower.
**TreeHugger benefits financially when a legitimately potential solar customer gets a solar quote through 1BOG. Of course, we're happy to help more people go solar, and we also don't mind earning a little cash from that in order to bring you more good articles.