Is your electric bill consistently above $150 a month?
If so, installing a solar power system on your roof could save you some money. But before you decide to go solar, you first must face a complicated array of options: buying, leasing, paying cash up front or financing the deal and paying it over time.
And before you go solar, experts say, you need to make sure your home is energy efficient. Many say that solar takes a back seat to using low-wattage lighting, insulation and switching to double-paned windows that reduce your energy consumption at less cost, but with better results.
Here’s a quick overview of your options:
The costs: Expect your solar system to cost $4 to $6 per watt. For the typical residential system, the overall cost will be in the $20,000 to $30,000 range.
If you lease, buy or get a purchase-power agreement, you can save further by paying all your costs up front. But loans and no-money-down plans allow you to spread those costs out over time.
Owning: You buy the system outright, either paying in cash or getting a loan to pay for it. You get the state and federal incentives directly, but are responsible for maintenance and repairs.
Leasing: You rent the equipment like any other appliance. The provider owns the system and gets the incentives and tax credits, but typically takes care of maintenance and repairs. You make a monthly payment for the life of the agreement, typically 20 years. Beware of price escalation clauses in the leases that can make them very expensive over time. You will need to have a good credit score and to qualify for a zero-down option.
Purchase power agreement: Similar to a lease, but instead of leasing the equipment, you’re paying a flat fee for the use of power. The provider owns the system and gets the incentives and tax credits, but typically takes care of maintenance and repairs. The agreement typically lasts 20 years, which means that your flat fee saves more as utility electric rates increase. You will need to have a good credit score and to qualify for a zero-down option.
Risks: You need to get multiple bids and make sure you are dealing with a reputable provider. Homeowners also are gambling that the manufacturer and providers will be around for 20 years. Since leases and power purchase agreements are linked to the property, owners are limited to buyers willing to take on the payments under the lease and power agreements.
State revisions to electricity rates also could make solar investments less lucrative than originally expected. To read more about the risks of Solar Energy click on the following: Risks of Solar Energy