South Carolina homeowners who are thinking about putting solar panels on their roofs are getting more choices, as leasing becomes an option.
Residential solar became an attractive option in the state just this year, when investor-owned utilities, primarily SCE&G and Duke, reached agreements that settled longstanding issues about costs.
The big issue: What will utilities pay to buy the extra power rooftop panels may generate on sunny days?
Essentially, the utilities agreed to credit customers for solar power at the same price customers are charged for utility-generated power, resulting in customers being billed only for the “net” power they use (this is called “net metering”).
Net metering, combined with existing federal and state income tax credits worth 55 percent of the cost of a solar system, and some additional utility incentives, has led to greater interest in residential solar in the Palmetto State, and to new businesses entering the market.
Now comes the next step in the maturing of South Carolina’s solar marketplace, and that’s solar leasing. With generous federal tax credits due to expire at the end of 2016, the subsidies for new installations are an advantage that solar companies want to press while they can.
The current 30 percent federal tax credit could be reduced or eliminated after 2016. The state’s 25 percent tax credit does not have an expiration date but could always be changed by lawmakers. The credits greatly reduce the cost for homeowners who want to put power-generating panels on the roof, but they also help finance companies that lease solar panels they own and install.
Already widespread in California, Arizona and some other states, solar leasing typically allows homeowners the benefit of solar panels without the large upfront cost of buying them or responsibility for maintenance costs. Leases are for long terms, such as 20 years. The idea is, the homeowner saves more, through lower electric bills, than it costs to lease the panels.
Now, wait, you may be thinking. If a company can make a profit renting solar panels, even while I pay less for power, wouldn’t I be better off buying them myself?
Well, probably. There is, however, substantial upfront costs. Depending on the size of the project, you might be looking at $20,000 or more. Tax credits will cover 55 percent, but the tax credits come back later (when tax returns are filed the following year) and don’t reduce the upfront cost.
Also, some people can’t take advantage of the state and federal tax credits. Tax credits reduce the income tax owed, but some people owe little or no income tax to begin with — many retirees in South Carolina, for example, are in that situation.
Would solar panels make financial sense for you? Some good resources for learning more about residential solar include:
The National Renewable Energy Laboratory’s solar power and cost calculator, at pvwatts.nrel.gov
If a homeowner buys solar panels, assuming they can take advantage of the tax credits, their savings on power bills should cover the cost of their investment in 9 or 10 years, the S.C. Energy Office estimates. After that, the solar power is essentially free, and solar panels should last more than 20 years.
Leasing companies turn that math around. They bear the upfront costs, and structure a deal so that they make money on the solar panels over the term of the lease while the customer saves money on power bills. Instead of big costs upfront and big savings later, the homeowner typically gets more modest savings every year.
The details of that estimate are vague, however, and my attempts to get hard numbers from the company last week were unsuccessful.
Sunrun’s website offers free estimates, but only after you provide your contact information on a form that also allows Sunrun to robo-call or text your phone with promotional messages. Also, Sunrun issued a press release saying they are serving South Carolina, but when I typed my ZIP code into the website, I got a message saying it isn’t serving my area yet.
Having said that, widespread rooftop solar is just beginning in South Carolina. The ink is barely dry on the utility rate agreements, and Sunrun just received certification to operate here a month ago. If you’re considering solar, gather information, get free estimates, and expect that the number of providers and quality of information will keep increasing.
Sunrun is the nation’s third-largest solar leasing company behind Vivent Solar and SolarCity. I would be surprised if the other big players don’t soon follow Sunrun to South Carolina.