The leases lock homeowners into decades-long agreements that some lawmakers say will likely exceed both the life of the roof and the time that the homeowner lives under it. What are the hidden costs of solar leases?
Federal lawmakers are raising questions about solar leasing companies that aggressively market zero-money-down leases but potentially overstate the savings and understate the risks.
Solar leases have become an increasingly attractive option for homeowners who are looking to shave energy costs but who may not have the money to pay upfront for the panels. Installation costs for solar ownership can run upwards of $20,000
. Homeowners who lease, by contrast, pay nothing upfront for installation.
Often, though, the leases lock homeowners into decades-long agreements that some lawmakers say will likely exceed both the life of the roof and the time that the homeowner lives under it.
A recent letter
to the FTC signed by a dozen Republican members of the House of Representatives highlighted the concerns:
As a very new industry with a limited track record and little regulatory oversight, the solar leasing market may pose a considerable risk to the increasingly large numbers of American consumers that commit to the leasing product without all of the relevant information (not to mention the American taxpayer, who heavily subsidizes each rooftop solar project).
The Republicans asked the agency what options exist to ensure that consumers are fully apprised of the costs, benefits and financial risks of solar leasing arrangements and what recourse there is for the consumers to be held harmless for the remainder of the lease if a company fails.
They also pointed to the problems that arise when homeowners want to sell their houses after entering into 20- to 30-year solar leases.
A burden to bear
“We have already heard stories about consumers not being able to sell their homes or having to eat expensive leases because the new homeowner did not want to take on the lease burden,” said Jeff Small, legislative director for U.S. Rep. Paul Gosar, the House Republican from Arizona who spearheaded the letter.
“There are even more dangerous liabilities for customers that lease if these companies were to go under during that lease,” Small added.
Among other things, the letter calls for the creation of a “resource center” where homeowners can evaluate the risks involved with leasing solar panels before they commit financially.
An FTC spokesperson confirmed that the agency received the Dec. 12 letter but declined to comment further on the communications. The FTC’s Green Guides
addresses the marketing of renewable energy such as solar but focuses on misleading environmental claims rather than misleading financial promises.
A comparison to the subprime mortgage crisis
House Democrats have also sounded an alarm. In a recent joint letter
to the Consumer Financial Protection Bureau (CFPB), they warned that “easy financial terms, increased demand and a rapidly expanding industry” are the same factors that led to the subprime mortgage crisis.
U.S. Rep. Ann Kirkpatrick, also of Arizona, said she has received numerous complaints about solar rooftop leasing practices in the state and wrote in the letter:
At the core of my concerns are reports that solar leasing companies may be overstating the economic benefits of signing a long-term solar lease while failing to disclose important information during the sales process. For example, customers are quoted savings each month on their utility bills. However, who calculates those estimations and are they accurate?
One homeowner who met with Rep. Gosar shared a Solar City sales brochure that quoted inaccurate savings based on the customers’ current utility company rate increasing by 4 percent annually.
“This has never happened in Arizona,” said Small, Gosar’s legislative director. “The highest it has ever been was around 3 percent and usually it’s less than 1 percent.”
A Solar City spokesperson told the Arizona Republic
that the company follows the law but will work with the CFPB and members of Congress to address concerns.
The CFPB did not return a request for comment. TINA.org also requested comment from Solar City but has not yet received a response.
Tips for leasing solar
While the FTC and CFPB mull over the concerns raised by more than a dozen members of Congress, homeowners looking into leasing solar panels — as with any big investment — should proceed carefully. Here are a few tips:
• Shop around — Get multiple bids so that you are not putting all your faith in the savings calculations of the one leasing company that is trying to win your business.
• Run the numbers yourself
– The Department of Energy has a formula
where homeowners can estimate the annual electricity production and electric bill cost savings for a grid-connected home solar system.
• Remember, it’s a long-term investment
— You may not want to enter into a 20- or 30-year leasing arrangement if you do not plan on living in your home for the entire duration of the lease. If you choose to put your home on the market, prospective buyers may not want to assume
the remaining cost of the solar lease. Inquire whether there are any early termination alternatives.
• No guarantee — Even the industry leader, Solar City, carries the following disclaimer at the bottom of its website: “Savings on your total electricity costs is not guaranteed.”
A spokesperson for the Solar Energy Industries Association did not return a request for comment.