Should you buy or lease solar power?

This was originally published on Monday, July 20, 2015, in the Pacific Daily News.  Click here to subscribe to the PDN.

Many people want to find ways to reduce their power bills. Everyone has little tricks or tips to achieve this. One way to lower your bill is using solar power.

When solar power was first introduced to the homeowner it was quite expensive. Innovation in the solar power industry has been steadily bringing the price point down. Many now can afford it. Recently there has been a game changer with the arrival of solar providers. These third-party owners have made solar power more accessible to many households who could not afford solar power. Now the question becomes, do you buy or lease?

Cost savings: In the case of solar panels, in my opinion, buying is usually better than leasing. If homeowners don’t have cash, they can finance their solar panels through personal loans or through a second mortgage. Solar installers can also work with you to create a payment plan that is very affordable. By owning your solar power system you are eligible for the 30 percent tax credit. You will be receiving the net metering credit to your power bill. You may even receive a tax deduction on the interest if you took out a second mortgage.

Selling your home: A new homeowner would likely be pleased to have a solar power system in place when they purchase their home. Studies have shown that homes with a solar power system sell faster and at a higher price. When you lease a solar power system, the equipment is not yours. Before entering a contract, be sure you understand what happens when you rent or sell your home. The next homeowners may not want to continue your contract, which may cause the opposite effect and reduce your home value.

Uncertainty: The price you pay when you enter a solar lease is based solely on predictions of the future. Some solar leases may offer a fixed monthly rate and others may offer an adjustable monthly rate. No one can predict how much fuel or solar energy will cost in 10 years. Most experts say that the price of fuel will continue to rise. Understand that in a solar lease you save money as long as your utility bill exceeds your lease payment.

Worry Free: The biggest benefit to leasing your solar power system is the maintenance, repair and monitoring is provided by the solar leasing company. The performance of your system is guaranteed. It usually takes a day or so to install and you start saving money once it is in place. If you cannot secure a second mortgage or just can’t afford that large initial payment to own, then leasing is a great solution for you.

If you do not want to power your entire house with solar but are looking for ways to cut your power bill, you can still utilize the sun.

The largest consumption of power in our home are those appliances that either generate heat or cool air.

Solar water heater: These have been around for a while. The solar panel is directly attached to the water heater. There are two different types: direct and indirect circulation. On Guam, because we have so much sun, the direct system is most popular.

Solar air conditioners: Let’s face it, many of us will find other ways to cut our power bill before thinking about shutting off our air conditioners. We all want to be comfortable at home, but that air condition comfort comes with a price. Solar air conditioners come in window, split, and central units, and in many different sizes.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like him to cover, please email moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com

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