Considering going solar in Connecticut? Read this first!
/With utility companies seemingly increasing rates across the board I’m seeing and hearing a lot more chatter about installing solar panels. There is no doubt that for some homeowners it can save them a TON of money. However, make sure you are doing your due diligence before signing on the dotted line. I hate to sound pessimistic but sometimes it is a terrible idea. It could hinder a future sale and/or you may just not save any money.
First and foremost, you need to have a solar audit done to see if your home is a good candidate and how much electricity your system could produce. Southernly facing roof with little to no shade from trees or other obtrusions? Good chance that you’ll be able to produce a lot of electricity. Keep in mind that geographic location matters too, sunlight hours are going to vary. Panels in Arizona are going to get more sunlight per year than panels in Maine, especially when snow is taken into consideration. Ideally the auditor won’t be someone that benefits from giving you an inflated estimate of how much electricity your system could produce.
So you’ve got your audit and you know how much electricity your system will potentially produce on a yearly basis. Now you have options.
Buying Outright
If you can do it, this is the best option. No interest or monthly payments to worry about. You will also add value to your property by doing so, however at a steep discount compared to what you paid. A typical system may cost in the range of $20k-$30k but only add $10k-$15k in the eyes of an appraiser. Definite cost saver in most cases if you plan on owning the home for 10+ years. If you plan on selling sooner than later there are better investments.
Financed Purchase
Use your solar audit to figure out when your break-even point should be. For example, if your typical electricity bill is $300 a month prior to solar, and you expect to save 50% that equals $150 per month in savings. If your system paid in full with interest costs $35k its going to take a little over 19 years to start capitalizing on the savings.
A financed solar system does add value to your home, however, if you sell the home before its paid off you will need to do so at closing. Or you can always keep paying for something you no longer own.
Leased System
They can save you money, but you need to read every line of the lease and make sure the math works out. When it comes to solar leases make sure you are shopping around and not just going with the first company to knock on your door.
Most solar leases come with an escalation clause that’s going to increase your monthly payment over time to stay on par with rising utility rates.
Leased panels do not increase the value of your home. In fact in many cases they can become a hindrance to selling because you will either have to buyout the lease (exorbitantly expensive usually) or the buyers need to qualify to take over the lease.
Anecdotally, when I have buyer clients looking at a house with leased panels (or any panels for that matter) I ask for a copy of the lease agreement, to see what the monthly payments are and will be as well as the buyout amount. I also ask for a copy of historical utility bills prior to the panels being installed. On 2 occasions when comparing the lease payments and utility bills I found the homeowners to be losing a substantial amount of money in the long term even when factoring in a yearly rise in electricity cost.
Solar leases can save you money, but you need to shop around, read the fine print, and do the math.
Homebuyers should ask the following:
1. Does the system actually save the homeowner money?
2. Is there maintenance involved? (One of the positives of a lease is no maintenance)
3. What if the roof needs to be replaced?
4. Do I need to qualify for and take over a lease?
5. Do the panels detract from the curb appeal and potential marketability?
6. What is the system’s life expectancy? Am I going to need to deal with removing them soon?
Need to sell your home with solar panels?
1. Make it easy for the buyers to form a decision, have utility bills etc. ready to go so you can show off your savings.
2. Document the yearly cost of maintenance.
3. Be prepared to pay off the loan or lease if necessary.
At the end of the day, solar can and most likely will save you money in the long run. Just remember to do your research and make sure its the right decision for your given circumstance...and make sure you read the fine print.
