The price of solar

Nina Widlund won’t rush a big decision. With 63 years of life experience under her belt, she tends to proceed carefully and cautiously. “If it sounds too good to be true,” she says, “usually it is.”

So, when a series of solar-system representatives came through her Chico neighborhood, Widlund found herself intrigued by the notion of leasing panels to generate power for her home. She just wasn’t ready to jump into a 20-year commitment without deep reflection.

“It’s kind of a can of worms, in my opinion, if you’re not asking all the right questions,” she said.

For example: What if she and her husband sell their home? They may well do that in a few years, because they’d like a place with more space for their hobbies and ventures now that they are semi-retired.

Even if they don’t sell, what happens if they need to re-roof?

These are a few of the things she asked the salespeople.

“You’ve got these issues that are popping up that I don’t think people are thinking about ahead of time,” Widlund said. “Some people, especially young people, they’re naïve, and until you’ve lived a little bit of life, how do you know what questions to ask if you don’t know you should ask the questions?”

Homeowners who want a solar-power system for their home either can purchase (typically for between $9,000 and $30,000) or lease. Leases run $50 to $200 a month, and may come with two options: a flat fee that’s the same every month over the term of contract, or a power purchase agreement (PPA) under which the customer pays for the electricity consumed each month.

“The value of a solar system is the power it produces,” said Jonathan Bass, vice president of communications for SolarCity, a solar system provider with an operation center in Chico.

Leases/PPAs typically run 20 years, Bass said, with SolarCity owning the equipment and providing maintenance, repairs and insurance to the lessee. Most customers opt to lease “predominantly to eliminate upfront costs but also for the services we provide. People don’t necessarily want to own and maintain a power plant on their roof.”

That contract remains in effect even if the lessee sells the home. In that case, either the new owner takes over the lease, or the old owner buys it out. Bass said SolarCity handles one or two contract transfers a day, calling it “a simple and straightforward process.”

There is a caveat, though: The solar company must approve the homebuyer for the lease.

Bass says it’s no big deal, that “if you qualify for a mortgage, you’re going to qualify for a lease or PPA”—and that a buyer would need to apply with a utility company to get electrical service anyway. “We don’t hold up a home sale.”

Alice Zeissler, president of the Chico Association of Realtors, says it’s not always that easy. Payments for a solar system lease count as debt, not expenses (like a utility bill does), so adding that amount on top of the mortgage has the potential to push a buyer out of the price range.

“[A solar lease] can make it so they don’t have as much purchasing power,” Zeissler explained. “I do have a lot of clients where their debt-to-income ratio is kind of a fine line, and they don’t have a lot of room there to add more debt like the solar panels.”

Bass said SolarCity has found 69 percent of its lessees who sold their homes determined the solar system actually increased the sale price. Zeissler says she does see solar as a positive selling point, when it’s been bought outright.

“[But] a lease, I don’t know if I would say that,” she continued, comparing a leased solar system to a car in the garage—having to assume payments for a vehicle you didn’t choose versus the windfall of one that’s fully paid off.

“I think solar’s awesome,” she said, “but the next person may not, and may not want it, and then it’s more of a deterrent … if it comes with a payment.”

As far as roofing issues go, SolarCity performs an inspection and recommends any required work get done before installation. Once the panels are up, Bass says they provide protection for the roof materials underneath.

Should a re-roof become necessary, SolarCity will take down its equipment and put it back up for a fee of $499, which the company says it spells out in its contract.

Finally, when the lease or PPA expires, the customer can renew it in five-year increments, purchase the system at depreciated value or have SolarCity remove the system at no cost.

These details are good to know—and are why Widlund is such a stickler for specifics.

For now, she hasn’t opted for a solar system, but neighbors have, and a house on her block with a leased solar system recently went up for sale.

“You’ve got to ask questions,” Widlund advised.