"Oregon homeowners can now go solar with no upfront costs"
By Richard Reed
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Oregonians put off by the high price of renewable energy can now go solar on the cheap, installing panels for no money down.
Contractors in a handful of states are starting to offer solar to the masses with lease deals that eliminate upfront costs. Oregon is joining the trend, thanks to regulations that took effect Jan. 1.
The Portland branch of a national solar company unveiled a lease program Tuesday enabling homeowners to put up panels for low monthly payments, cutting their electricity bills and carbon footprints. At least one other contractor, a local company, is developing similar products.
Managers of SolarCity, a California-based company, say Oregon homeowners can go solar for as little as $20 a month with no up-front costs. The new financing option, which incorporates state and federal tax credits, results from an Oregon Energy Department rule change.
"For less money each month than the cost of two movie tickets, Oregon homeowners can install solar power," said Rob LaVigne, SolarCity's regional director in Oregon. "What's nice about a system like this is there's no hidden costs."
The new approach departs from programs that have required homeowners to spend thousands of dollars on systems that gradually yield returns. The lease option may not cut a homeowners' electricity bills that much, but it can warm the hearts and homes of utility customers who want to go green.
In an example provided by SolarCity, Susie Homeowner signs a 15-year contract, paying $25 a month to the company. SolarCity installs, guarantees and insures the 3.2 kilowatt system, which includes about 16 solar panels.
Susie's $70 monthly electricity bill drops by $30. The remaining $40 bill results in a $5 monthly savings after her lease payment. She also pockets a portion of the tax credits issued by the state.
SolarCity makes its money from the income stream and rebates and by claiming a slightly larger federal tax credit than the homeowner would get. As the solar system’s owner, SolarCity can depreciate the equipment for tax purposes.
Under the conventional approach, Susie might instead have paid $6,000 for her system after rebates and tax credits. Her $70 monthly power bill would still drop to $40, saving her the same $30. She'd break even on the solar system in about 17 years -- or somewhat longer, if interest costs are counted, according to SolarCity's example.
Customers of Portland General Electric and Pacific Power are eligible for the lease arrangement. Response has been strong in California, Arizona, Colorado and Texas, where SolarCity already offers leasing.
"It could do very well" in Oregon, said Glenn Montgomery, executive director of the Oregon Solar Energy Industries Association.
The number of Oregonians going solar has been growing rapidly, boosted by comparatively generous rebates and tax credits. But the total is a tiny portion of PGE and Pacific Power's customer base.
More than 1,400 Pacific Power customers have solar systems, out of about 550,000 ratepayers. A similar number of PGE customers have gone solar, out of about 822,000. Solar customers can claim tax credits or apply for pilot programs that pay a premium for energy they generate and consume.
Customers seeking to go green already have the option of paying a slight premium for renewable power from utilities. But rooftop panels make a statement and provide at least some savings.
Imagine Energy, a Portland-based company, is beginning to offer zero-down solar systems somewhat similar to competitor SolarCity's products.
"We offer solutions where people can pay basically no money up front," said Jonathan Cohen, Imagine Energy principal and founder. "Most of ours are ownership models, where the client owns the system at the end of the period."
SolarCity’s customers can opt to buy their systems at the end of the 15-year lease period; otherwise, they can renew the lease or have the equipment removed.
SolarCity, of Foster City, Calif., is an expanding business with 10,000 customers. The company, which has installed about 275 solar systems in Oregon, recently opened a 15,000-square-foot branch in Portland. It employs 27 here and aims to hire about eight more by March.
SolarCity is offering its leased systems only to homeowners, not tenants. It uses panels made by companies including Kyocera, Sanyo and SolarWorld.
A prospective customer can visit SolarCity's website and enter a residential address, pulling up a photo of a home and entering information to receive initial energy-production and price quotes. Homeowners can also visit one of 19 outlets of The Home Depot in Oregon for information.
"We rolled this out initially in California in April and Arizona in mid summer and the response has been great," said Steve Denney, associate solar installation merchant at Home Depot's Atlanta headquarters. "This is a way for customers to do it without emptying out their bank account or taking a loan out."
Under SolarCity's program, the company guarantees a certain level of power generation from an installed system, promising to compensate the customers if panels underperform. When customers sell their homes within the lease periods, they can transfer their contracts to buyers.
SolarCity is teaming with Morgan Stanley, U.S. Bancorp and other firms to provide financing. Smaller local solar companies lack the ability to offer leases.
John Patterson, president of Mr. Sun Solar in Portland, says he's plenty busy installing systems for customers who can afford to pay upfront costs. He shrugs off the competition from SolarCity's leases.
"Anything that gets solar on rooftops," Patterson said, "I'm happy to see happen."