The Solar Industry Reaps the Profits from Your Good Intentions

One of the most popular additions people have been making to their homes in the last few years is a green energy source, like solar panels. The sales pitch for these systems is very enticing, usually involving saving money and reducing your carbon footprint.

While solar is a fast growing energy segment, it does not make sense for most homeowners. First, estimates are that only about 25% of American homes have the roofline, geographic orientation, and amount of sunlight per year needed to take full advantage of a solar energy system. Second, in most cases, adding a solar energy system to your property will cost you money over the long haul, and that is a fact most solar energy companies do not want to tell you upfront.

How Can You Actually Benefit?
The only way to truly maximize your financial benefit from a solar energy system is to pay for it upfront and take full ownership yourself. If you can do that, YOU get the tax benefits, the inexpensive power, and the income from selling your excess power back to the power company. The problem is, most homeowners do not have the extra tens of thousands of dollars such an installation will cost

The vast majority of systems you see sprouting on your neighbors’ roofs are either bought over time, through an agreement called a PPA, or are leased outright from the solar company. In neither of those cases do you, the homeowner, immediately own the system. So, the tax credits and other benefits in place from state and Federal programs flow to the solar company, not to you.

You pay the solar company for the power your own rooftop is generating, and your super low rates for the first year or two escalate significantly over time. Within a few years, you could actually be paying more for the energy your home is generating than if you were just buying it off of the grid. If you get any income from generating excess power, you are paid at the wholesale rate, but on cloudy days and at night you are paying the retail rate for power from the grid, so again, you are not really making any money.

What About When You Sell?
The lease or PPA becomes registered as a lien against the property, and most real estate contracts require a lien be paid off in full before the property can be transferred to a new owner. If a buyer is interested in assuming the lease, they have to be financially qualified for the obligation, in addition to the mortgage. Many buyers simply are not interested in that kind of long term obligation.

In that case, the homeowner/seller usually has two choices: either buy out the remaining years on the lease and give the buyer the energy and tax benefits they didn’t get for themselves, or pay the solar company to terminate the lease early AND to have the system removed and repair the significant roof damage left behind once the system is uninstalled

If they both sound like expensive alternatives, you’re right.

Even if you don’t plan on selling any time soon, during your ownership and use of the system you will have to maintain an extra rider on your home insurance policy to cover storm or other damage to the system, and for its removal, roof repair, and reinstallation if your underlying roof should need work during that time.

Is There No Bright Side?
There is hope for the future. Tesla, for one, has developed roofing shingles that are actually solar collectors and instead of damaging an underlying roofing system, actually becomes the roofing system. Their cost is not significantly greater than the panels that get bolted into your existing roof, and are less visually obtrusive. As costs continue to come down, they may become a more attractive alternative to the majority of solar systems we see today.

But, at least for the near term future, if you wake up in the middle of the night with the brilliant idea of making your home more attractive for sale by adding a solar energy system, please… roll over and go back to sleep. You could actually save yourself from a pretty horrifying nightmare.


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Wayne Curtis
Wayne Curtis has been a licensed real estate agent for 23 years, serving the Baltimore region, currently with REMAX Advantage Realty. Contact him with your real estate questions,