Leased Rooftop Solar No Longer a Good Deal in Arizona, Says Tech Site

Categories: Solar Energy

Happy customers in a SolarCity promotional shot.
Two recent policy decisions in Arizona regarding solar energy make leased rooftop panels a poor deal in the state, says an energy-news website dedicated to promoting the technology.

Greentech Media's research into the impact of the Arizona Corporation Commission's November decision to add a new, yearly fee to the bills of new rooftop solar customers, combined with a new tax hike for leased solar systems, means it will cost customers more, on average, then electricity from the grid.

See also:
-Home Solar in Arizona Takes Hit After Vote by Corporation Commission to Add Surcharge

The overall effect means the solar-lease industry may "crater" in 2014, says the June 30 article by Josh Cornfeld, who co-authored a 2010 paper for the Environmental and Energy Study Institute promoting the benefits of feed-in tariffs for solar energy.

Leased-solar systems took a hit in the media last week with a story in Bloomberg News, picked up today by Yahoo Finance News, about the potential pitfalls in trying to sell a home with such a system. The article includes the interesting claim that solar firm SunPower "initially rejected" a potential homebuyer because of a low credit score, frustrating the hopeful seller.

The Greentech article includes charts and acronyms like LCOE, for levelized cost of electricity. It boils down to this: The average electricity retail rate in Arizona is 11.3 cents a kilowatt hour, according to Greentech media, and installing a leased solar system boosts that average cost up to 12.1 cents an hour.

"This finding suggests that the value proposition for installing (third-party owned) distributed solar in Arizona in 2014 has been damaged by the recent policy shifts," Cornfeld writes. Earlier in his article, Cornfeld claims "many" in the industry are worried the rooftop-solar market in Arizona could "crater."

Solar advocates have been pushing for a new law in Arizona that would eliminate the new tax on leased solar equipment, but have so far been unsuccessful. The tax has also become an issue in the upcoming race for two open seats on the corporation commission.

UPDATE: See the Phoenix Business Journal story today about SolarCity and Sunrun suing the state over the property-tax issue.

Got a tip? Send it to: Ray Stern.

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Leases and PPAs are a bad deal and not just in Arizona: 

1. Add up your lease payments and when compared to an outright purchase you'll find that you're easily paying up to 3 times more on a $0 down solar lease versus a purchase.

2. You'll pay so much more for a lease than a purchase that's it's actually you who will be over-paying for your own maintenance, monitoring and insurance not the leasing company.

3. You'll have trouble selling your home because what home buyer in his right mind will want to assume your lease payments on a used, outdated system when they can buy a brand new system with the latest technology and keep the 30% federal tax credit for thousands less.

4. After making 20 years worth of leasing payments, you won't even own the system. It will still belong to the leasing company.

5. Check that quote from the solar leasing company and you'll find that most of the time they won't even tell you what brand of equipment they're installing on your home. I wonder why?

6. Most if not all $0 down solar leases include an annual payment escalator that will increase your monthly payment by up to 2.9% per year for 20 years.

7. You'll be stuck with the same aging solar system without the ability to upgrade for the full 20 year term of the contract. If you bought your system instead, you can sell it at any time and take the proceeds from the sale and upgrade to the latest and greatest equipment. You can't do that with a lease because it's not your system to sell.

8. You'll have to forfeit the 30% federal tax credit and any applicable cash rebate to the leasing company and you won't get tax deductible interest on your lease payments. Only a $0 down solar loan or $0 down PACE financing will give you tax deductible interest and let you keep all of your incentives for a much better return on your investment. 

eric.nelson745 topcommenter

Pretty soon Arizona will be as hostile as Oklahoma when it comes to renewable energy. "Sustainability" is a dirty word over there.

Cozz topcommenter

Totally agree. You get none of the tax benefits or rebates by leasing. The company that sells you the lease does.

You're lucky if you save 15.00 a month by leasing and being tied up with the lease for many years.

...and if APS or SRP get their way buying off the Corporate Commission as they have for many years, solar will end up costing you more in the long run with all the fee's that will be added on.

APS is against anything that cuts into their profits regardless of the bullshit they hand you about being in favor of conserving energy, they are some of the biggest crooks in Arizona backed by the Arizona Corporate Commission.


@shaksign  Solar leases are not cool programs. They're the closest thing to a ripoff as it gets. 

No solar leasing companies installs a solar system for free because you end up paying up to 3 times more than what you would have paid, had you purchased a system outright. Easily $10,000 to $20,000 more than what you would have paid for a purchased system.

In fact you'll pay so much more for a leased system that it will actually be you who will be over paying for your own repairs, monitoring and insurance, not the leasing company.

And good luck ever selling your home with a solar lease attached to it. What home buyer will want to assume your non tax deductible lease payments on an outdated solar system, when they can by a brand new state of the art solar system, keep the 30% federal tax credit, any applicable cash rebates and get a $0 down solar loan with tax deductible interest.


@eric.nelson745 I suspect that as soon as they start seriously running out of water, people will ask why they killed solar.

AZ: 3.2% solar, and 40-50% coal.  

Too bad it's not really funny.

Flyer9753 topcommenter


Actually it's not....

They just think it means sustaining the fatness of THEIR wallet (big oil and the politicians owned by them) and the thinness of YOUR wallet


@Cozz pinacle corp is who owns APS and also us and i know a board member that said he wanted to torpedo the "nonsense" of rooftop solar energy!

Cozz topcommenter


I'm sure they do since since the sun is free and it cuts into their HUGH profits.

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