Solar Panels- A Good Idea?

Question

Hello! There is a company in my area that will install solar panels with no up-front cost, and simply take the difference in your electric bill as payment until they’re paid off. I own a few apartment buildings that do not have separate utilities, so I pay all electric. At face value, going the solar route seems like a no-brainer to me. Is there anything I should be considering, that I’m missing? I’m new to REI and as utilities are easily my biggest expense (even more than the mortgage), I’m looking for ways to help offset that cost. Would appreciate any input!

Evan Polaski · Answer

@Kaybreh Mathis, I would just be very careful as to how this arrangement is truly setup.

If you are truly not out of pocket anything more than you currently are, then sounds like a decent deal.  But that also means that if you were willing to buy them yourself, you would be earning a better return + the 24% federal tax credit still available.

I would shop around to other installers and see what the costs are if you were to buy outright.  Other companies may have a financing option that is more favorable, where you can finance all or most of it, and immediately start saving money, versus paying the same.

Things I would look out for with the opportunity you present: what happens in winter when you are making very little by way of solar?  Do you pay your utility and essentially not pay the solar provider?  Is your monthly expense locked in, or if the utility raises rates, you have to pay more to solar provider?  What type of interest rate are they building into this "pay off" amount (with solar providers and how the tax credits work, most have a cost they would charge you, then a discount if you paid in cash, since you can't get tax credit in the financing costs).