Choose the Best Option to Save Money with Solar Power
No Long-Term Plans? Choose the Best Option to Save Money with Solar Power
Concern on what happens on the sale or other transfer in home ownership when buying solar as a product or signing a solar service agreement is a common focus among homeowners. Let’s look at the pros and cons of each type of transaction; product purchase and a solar service agreement, when considering the possibility of moving in less than 10 years.
Product purchase – there are many studies that suggest having a solar system on your home attracts buyers when listing your home for sale. These studies provide some interesting antidotal data points that suggest owning the solar panels on your home will result in an increase in home value; or justify the homeowner in adding the price they paid to purchase the solar system to the listing price. However, the unfortunate reality has been quite a bit different. The vast majority of homeowners, who have owned solar systems, sell for the price the home buyer could afford, and nothing more. So, homes are still bought on a price of home basis, rather than a price of home and the cost of the solar system.
Given the established behavior of the large home building industry, it is increasingly clear that this dynamic is not bound to change anytime soon. So why is this important? Because the idea that you will own your home long enough to get your dollars invested out of the solar system is not near as likely as many say. In fact, “investing” in a solar system is not too much different than “investing” in that pool in your backyard. It might add some value to your home, but the home buyer does not care how much you paid for your “investment;” so you are not very likely to get your money out of it, let alone make a profit. Once you put your money into a piece of equipment for your home, that money is stuck and you can’t necessarily get it back, even if you move.
Service sign up – Everyone, including a home buyer, understands that a home needs power and that a power bill comes every month. And everyone understands that paying less for a commodity, such as power or gasoline, makes sense. So telling the home buyer that they can either pay the utility more for power every month or pay the solar power provider less for the same power if the buyer assumes the solar service agreement, is a practical proposal. Thus far for the solar service industry, the vast majority has experienced quick success in transferring solar service agreements.
In most cases, the home buyer will also benefit from a performance guarantee through the service agreement. The performance guarantee ensures that the solar power provider managing the system will guarantee that the system produces a certain amount of energy; and if it doesn’t, your solar provider will reimburse the difference. Additionally, the homeowner is much less likely to lose money in the transaction compared to a product purchase because they have not spent money out of pocket insuring the system and tending to costly system repairs over the years.
As far as ease of transfer, having the system with no loan attached to it and no service agreement will almost always be the easiest way to go. However, the transfer of a solar service agreement is fairly straight forward and requires a simple release of the UCC filing by the solar service company. These transfers are happening more frequently every day and are becoming pretty common place. Again, the home buyer is locking in a lower cost of power; which means that the new homeowner is going to have a lower electric bill, and that is attractive to buyers. A loan will always have to be paid off; as loans do not transfer to the home buyer. So having a loan against a solar system will most likely always be the most difficult way to transfer your solar power in the sale of home process.
All of these pros and cons pertain not just to moving, but also to any transfer of home ownership. So, any issues of not staying in the house for the full 20 to 25 years or given age, not expecting to live that long, result in the same questions to ask and answer. Concern about advanced age or moving does not hinder the homeowner because no matter what, solar power; or reduced electricity bills will always provide a benefit to the next home buyer or owner. With much better economics, lower risk of loss of money, and easy transfer, the solar service agreement is likely to be the best way to go for you.