PHILADELPHIA — On a recent cold morning, Micah Gold-Markel helped his installation crew hoist new solar panels onto the roof of a two-story, red brick house. The installation was like many others his company, Solar States, has performed since 2008, with one big difference: This time, the homeowner isn't buying the panels.
Instead, the homeowner will lease the panels from another company, called LightReach. For most of his own company's history, Gold-Markel avoided leasing. With these arrangements, sometimes called subscriptions or power purchase agreements (PPAs), a third party owns the panels and leases them back to the homeowner.
But last summer, President Trump signed legislation that ended federal tax incentives that had cut at least 30% off the price of purchased panels. Similar incentives for leased panels remain. That's prompting solar company owners around the country to now embrace leasing, hoping that will help them stay in business as Trump continues his attacks on renewable energy.
"I talk to dozens of installers every quarter that range from small, mom-and-pop local installers to the large national players," says Zoë Gaston, solar analyst with the research firm Wood Mackenzie. In the past, many said they wouldn't offer solar with third-party ownership. But since Trump signed the budget law last year, she says, "I've heard a lot of these companies, really changing their tune."
The problems with leasing solar panels
About 5.8 million homes in the U.S. have solar installed; that's 8.2% of U.S. homes that are suitable for solar, according to Wood Mackenzie. The firm says just over half the installations for the first three quarters of last year were owned by a third party, such as a leasing company.
The residential solar industry has been hit with rising consumer complaints recently, mostly about high-pressure sales tactics. Leasing solar panels has come with problems, too, including the potential to reduce a home's value and service delays for customers of companies that went bankrupt.
"Traditionally, I've viewed — and the company has viewed — leases as very bad," Gold-Markel says, because he thinks a key benefit of rooftop solar is that people can own their own energy generation. "I think that's what people who get solar want — they want to own their energy future. And leasing is not that."
When a leasing company owns the panels, it also collects the federal tax incentives that are still available. Gold-Markel says his customers can still save money on their power bills.
"I'm getting older, I want to cut some costs, you know?" says Pete Wilson, the owner of the home where Solar States is installing leased panels in North Philadelphia. He wasn't sure exactly how much he'll save, but signing up seemed risk-free, since Wilson won't have to pay for the panels up front.
Gold-Markel says one of the reasons he's become more comfortable with leasing is that companies have entered the business with better deals for homeowners, such as lower "escalators," or price increases, over the lifetime of the lease, which is usually 20 years.
Bucking the leasing trend
Even with the change in federal incentives, there are some solar company owners who won't offer leasing or subscriptions.
"I would never do that to my customers," says Joy Seitz, CEO and owner of American Solar and Roofing in Phoenix, Ariz. She says leases and other arrangements are complicated financial products, and most customers don't understand them.
She says a lease can be difficult to transfer from a homeseller to a homebuyer, which can cause problems years after a company installed the leased panels. Seitz says selling panels offers her customers a solution to high electricity bills — "Not giving them solutions that are going to be problematic for them in three to five years. And having them hate me at the grocery store."
But Seitz knows she's bucking the trend in her industry.
Gaston says solar companies are offering more lease options now, including prepaid leases. That avoids lease financing costs while still taking advantage of the remaining federal tax credit, assuming companies pass the savings on to the customer.
How to protect yourself
If you're considering rooftop solar for your house, there are some basic steps you can take to access remaining tax credits for leased systems and protect yourself.
As NPR previously reported, be prepared for high-pressure sales tactics. Consumer advocates say you should be skeptical of anyone who knocks on your door selling solar. The Energy Trust of Oregon has collected lines these salespeople often use and advice to protect yourself from scams.
You probably want to avoid the solar companies that find you, either at your front door or at a local big-box store. Often these folks only sell solar, they don't install it. They've been dubbed "solar bros" and experts say it's better to buy from the company that actually installs panels.
"I would encourage homeowners to work with an installer they trust, such as a local one in their area," Gaston says. "There's also energy marketplaces like EnergySage, where they have advisers that can help you navigate the process."
The Amicus Solar Cooperative includes dozens of independent installers around the country. There also are ratings sites, such as Solar Reviews, or you can check out reviews for a specific company through an internet search engine.
One of the most important things you can do is to take your time. That can be difficult because creating urgency is a common sales tactic.
"If you're getting into a lease, read the entire lease," Gold-Markel says. "Make sure you understand it fully. If somebody can't explain to you a term, don't sign it."
Closely examine what you're paying for electricity now and then compare that to what the solar installer is offering. Find out if the contract includes an escalator — a more expensive price in future years. "What are the costs if I need to remove it at any time? And what's the buyout going to be if I need to sell my home and the next person doesn't want to assume the lease?" are a few more questions Gold-Markel advises asking an installer.
Gold-Markel still isn't completely comfortable with leasing, but his company has 70 employees and he feels an obligation to keep them employed.
"It shouldn't be this difficult to be in the solar business," he says. "I really didn't get in the solar business for financial shenanigans. I got into it because the sun is the source of all energy and it rains down energy on our heads every day. And if we don't use it, it's a waste."
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