Lease roof-top solar power system for zero down

Until recently the high, up-front costs for purchasing solar power equipment, as well as certain roofing considerations, have discouraged many homeowners from the energy-efficient advantages of a solar power system. Now a number of state and multi-state leasing/financing companies such as NRG SunLease, SolarCity, Sungevity and SunRun provide residential solar system leases with no up-front costs. Your monthly leasing cost plus the residual amount you pay your power company almost invariably saves you money every month, starting from day one. So, if your roof is solar-ready, you might just be out of reasons to put off installing a solar energy system.

The right roof for solar

Shade and the number of daylight hours in your region matter more than most roofing material, pitch or climate when it comes to installing solar panels. The national leasing company you choose typically provides for a local contractor to make a structural assessment of your roof at no cost and to determine whether it meets current building codes. Other considerations for the roof might include the following:

1. Roof condition: Solar power panels can last 25 to 35 years. Companies like Sungevity -- and certain building codes -- require that the roof is 15-years-old or less, and/or with no code-compliance issues. Jim & Pat McGovern of Tucson, Ariz., had a 20-year leased solar power system installed by REC Solar in December, 2011. The McGovern's 21-year-old, Tucson-home's roof had red, mission-style clay tiles and no leaks, but the tar paper underneath the installation site was baked and disintegrating. The McGoverns were able to have the roof fixed just in the area where the panels were installed.
2. Asphalt shingles and shakes, steel and clay tiles: Solar systems are installed every day on roofs of these types. Contractors should have special installation training for tile roofs. Lease agreements generally include installation insurance paid for by the company.
3. Flat roofs: Photovoltaic panels are angled upward on one side for better performance.
4. Homeowners' associations (HOAs): Many states now have laws preventing HOAs from banning solar panel installation on residential roofs. In some states where HOAs can still prohibit solar panel roof installation, roof mount restrictions may be lifted (or less stringent) if mounting solar panels on the ground compromises the system's performance. Some leasing companies, however, flatly refuse to do ground installations because of the expense involved -- extended wiring, concrete pads, mount construction and higher ongoing maintenance costs -- while others will agree to it but pass added costs on to the homeowner.
5. Corrugated metal roofs and mobile homes: These roofs are often poor candidates due to insufficient truss support.

Leasing vs. owning solar power systems

A major difference between leasing and purchasing a solar power system is who assumes the risks. The leasing company owns the equipment and is, therefore, responsible for financing, insuring, installation, system performance and repairs for the duration of the lease.

To eliminate start-up purchase costs, the homeowner grants any federal government and electric company rebates to the leasing company. Depending on which company you choose, monthly lease rates can be precisely predicted for 20 years in advance, or can rise and fall with monthly kilowatt-hour usage. Conversely, if you purchase a system, it costs roughly $8,000 to $16,000 up front, less your rebates. Once you recoup your purchase costs -- in about 5 to 8, or more, years -- your only monthly cost is for any power usage over what the equipment provides. However, repair costs and system-efficiency maintenance costs for purchased systems are the homeowner's responsibility after the warranty period is up.

How a typical solar system lease works

While details for residential solar power leasing may vary somewhat from one company to another, most follow a similar process. The McGoverns, for example, found their local contractor, REC Solar -- who represents the national financing company, NRG SunLease -- through Costco. Here's how the McGoverns' chosen program proceeded and how other typical leasing programs might work:

Local contractors: In addition to providing financing, NRG SunLease, the McGoverns' financing company, covered the up-front costs for local contractor, REC Solar, including inspection; detailed structural analysis; engineering; permitting; complete installation of the system; and processing the time-consuming mountain of paperwork. REC Solar provides any physical repairs required in the future.

Financing: NRG SunLease reviewed a year's worth of the McGovern's electric kilowatt-hour usage and their credit rating before proceeding. Some leasing companies, such as Sungevity, after completing a similar review process, allow customers who qualify to sign the 20-year lease online. In exchange for the homeowner(s) relinquishing any government and utility company rebates to the leasing company, they can be offered very low financing rates. After installation, there might be a small, monthly, power-company base fee -- amounting, for example, to about $10 in Phoenix -- and a small, monthly, power-company usage fee, which covers the cost of electricity use above and beyond what the solar system generates. The power company bill plus the leasing fee typically total less than a current average electric bill. Savings are expected to increase with time, whether a homeowner chooses a flat-rate or a variable-rate lease.

Sungevity and SolarCity are among companies that work with either local independent solar sales and installation companies or big retail stores like Home Depot. These working partnerships with national leasing companies allow the smaller contractors to offer incentives that are competitive with those of the big stores.

Maintenance: As in the McGovern's case, the local contractor who works with the leasing company handles repairs. Because the leasing company profits when the system is operating optimally, they pay for the system's upkeep and actively monitor its performance via the Internet. Homeowners can also access the performance graphs and charts live online, so they're always informed about their system's performance. Jim McGovern, for example, follows the online action of his solar energy system the way some people might follow sports or stock market updates.

Installation timetable: The design and permitting take roughly 90 days to complete; installation requires about three days.

Lease termination options: At the conclusion of a lease, depending on its provisions, the homeowner might have these four options: lease renewal, free removal, upgrade or purchase.

Zero-down leasing can make residential solar systems affordable, but because it's still a fairly innovative way to finance solar, leasing companies are offering generous sign-up bonuses -- such as cash-back incentives ranging from less than $500 to as much as $1,000 -- and referral programs. With so many good reasons, homeowners who have been waiting for the right time to install solar might find that time is now.

Above all, when a cleaner technology partners with significant utility savings, homeowners have a lot to gain.