The same pathway that has put many in the seat of a new car -- the lease -- is taking off as a financial vehicle for homeowners who don't have tens of thousands of dollars sitting around to buy a rooftop solar-panel system outright.
It works like this. A solar company that offers a lease option -- like SolarCity and SunGevity -- comes to your house to determine whether a solar array would work on your roof. If it's suitable, depending on the company, you can choose either to pay zero upfront and a regular lease fee each month, or you can pay some money up front and have lower or no monthly lease fees.
A rooftop solar system from SolarCity, for example, that's guaranteed to produce a little more than 6,000 kilowatt hours annually might cost $63 per month with nothing up front. The payment is set to increase 2.9 percent annually, which the company says is lower than average price increases from the utilities.
Putting some money down on the system -- say, $2,500 -- would lower the monthly payment to $53 and erases the yearly percent increase. The last option would be to pay the lease upfront, which would cost $7,920 and results in no monthly payments for all 20 years of the lease.
While the solar company handles installation, does maintenance and ensures the system's productivity, it also collects the subsidies and tax credits that the state and federal government give to people willing to invest in the renewable energy.
The solar company, not the homeowner, owns the equipment -- just like a car dealership owns a leased car. And so in many cases, when it comes time for routine maintenance or repairs, the company is responsible. When the lease ends, you have the option of buying the system, renewing the lease or having it removed. If you move out, the solar systems also can be transferred to a new owner.
SolarCity, a California solar outfit, has signed more than 40,000 leases countrywide. The company's chairman, Elon Musk, is the CEO of electric car company Tesla Motors and spacecraft firm Space Exploration Technologies, or SpaceX.
In May, Goldman Sachs said it would put up $500 million in financing for SolarCity leases, a chunk of the $40 billion the investment bank plans to set aside for renewable projects in the next decade.
"The ability to get in front of homeowners is kind of the biggest hurdle," said Lee Keshishian, SolarCity's head of operations for the East Coast. "Once we get there, the vast majority decide to go with us."
On the money and billing side, with the leased system, homeowners will now get two bills per month -- one for the lease payment and the usual electric bill from the utility -- and the savings from the system comes when the total of those two bills is lower than previous energy bills.
Keshishian said that most customers see a 10 percent to 20 percent drop in their energy bills. And SolarCity, as well as other companies, also ensure the system's productivity for the entire 20-year lease.
Jay Pelchar, a high school math teacher who lives in Burlington, Conn., went with SolarCity after wading into the complicated world of solar systems. He researched the tax credits and the subsidies, took a step back, and sought help.
"The learning curve on this is enormous," said Pelchar, 45.
An intermediary company, One Block Off the Grid, hooked him up with SolarCity. During a conference call last summer, Pelchar heard his options and agreed to lease a solar system.
"Without the leasing option, we would not have solar," he said. "No question, I would not be able to purchase a system for myself."
He took the option of putting up money for the system -- about $8,000, which covers all of his lease payments. This way, SolarCity still handles the maintenance and repairs of the 20 solar panels that sit on a steep south-facing portion of his roof.
The process from "yes" to solar power coming down from above took just a few months. SolarCity did a site visit to inspect his house, making sure that it didn't have anything blocking the sun and that its roof was structurally sound. It later came back and did a home energy evaluation. By the first of the year, the system was up and running, with little effort from Pelchar.
Pelchar also passed another of the hurdles to leasing a solar system -- a credit check.
The economics of Pelchar's decision to invest up front in the system, rather than choosing to pay nothing up front, were well thought out.
"I'm only five months into it, but it seems to me, investment-wise, to be the most secure investment you can make," he said. With electricity rates an uncertain thing at best, the solar array locks in a set price for Pelchar.
"I'm pretty much guaranteed that I will generate enough in eight or nine years to pay back my investment," he said.
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