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Category Archives: Renewable Energy

Financing Solar, One Mortgage at a Time

25 Friday May 2012

Posted by Kelly Bennett in Mobility, Renewable Energy

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mortgages, solar

Carrboro, NC Solar Panels

When my wife and I bought our house, we didn’t have a lot of cash for the down payment. Or the closing costs, either, for that matter. And we especially didn’t have a lot of cash to fix up said house. And why would we? We planned to move within five years anyway. We’re typical of our generation.

Which is one of the reasons we don’t have solar panels. Depending on the size of your house, how much light it gets, and the tax credit situation when you decide to go solar, they can take anywhere from five to 15 years just to pay for themselves. Solar hot water systems are cheaper than electricity-producing photovoltaics, but who knows if you’ll be living in a given house that long?

The barrier to solar may not be how much it costs, but how we pay for it. One way to get solar power for your house is to make a solar power purchase agreement (SPPA).  In a SPPA, a third-party developer owns, operates, and maintains a photovoltaic solar system for a host customer who agrees to site the system on his or her property and purchase the system’s electricity for a predetermined period. This gives the customer stable and sometimes cheaper electricity while the solar services provider gets income and, many times, tax credits. There are also lease-to-buy agreements in which the homeowner owns the solar array after purchasing power for a set amount of time. This seems like a pretty good way to get some solar panels installed around the country even if you can’t do this in every US state.

Still, there’s also the mobility issue. If you think you may not own your house for more than five or six years, solar panels are the last thing you’re going to buy. But what if we treated solar panels like a tank of heating oil? When you sell a house with an oil furnace, you don’t just give the buyer the leftover oil in the storage tank. Depending on how much oil is left, they cut you a check at the closing. Why not value a lease-to-own solar array in the same way, except pay for it in the mortgage instead of through the closing? When someone buys a house with, say, seven years paid into a ten-year solar lease, they could roll that price into their 30-year mortgage, pay for power for three more years on the lease, then get renewable energy for the foreseeable future.

There could be a lot of winners using this system. The original homeowner and solar investor would essentially have their power bills paid for them by a future buyer. The solar services developer would probably sell more solar systems. And homebuyers could finance solar systems as a part of their house (like their furnace, or central air conditioner) over a longer period of time. It’s likely there will be problems in valuing solar systems in the short term and we need to get solar purchasing agreements more widely accepted while we’re at it, but this could be an easy way to knock down another barrier to renewable energy.

– Special thanks to Chelsea Conover Barnes at the North Carolina Solar Center.

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