The Burning Solar Question: Lease or Buy?

The economics of solar energy are changing – mostly for the better – making a once-unaffordable energy source suddenly doable for even small co-ops and condos. Factored into these new economics are the declining cost of solar hardware, plus an abundance of incentives and tax breaks. But many of those incentives and tax breaks are scheduled to expire in the near future, so current the window of opportunity won’t remain open forever. This may be the time for your board to act.

While the initial cost of purchasing a solar energy system may seem daunting, there are financing options that allow co-ops and condos to pay incrementally over time, whether they decide to purchase their system, or lease it from a solar installation company.

“For co-ops or condos with smaller reserves, leasing can be a win/win,” says Noah Ginsburg, the director of Here Comes Solar at Solar One, a nonprofit that assists building owners, including co-ops and condos, to implement cost-effective solar projects. “There’s little or no upfront cost, and your electricity costs can be 10 to 15 percent lower than buying from a utility.”

Here are the two primary options:

Direct ownership. Although this requires the heftiest out-of-pocket cost and has the lengthiest payback, it generally provides the biggest savings and return on investment over the lifetime of the solar energy system (25 years or more) since there’s no interest to be paid. If a cash payment isn’t doable, co-ops and condos can secure solar loans through their banks or financial institutions such as the New York City Energy Efficiency Corporation (NYCEEC). Affordable Housing Development Fund Corporation (HDFC) cooperatives “can also get similar loans or grants from the city’s Department of Housing Preservation and Development,” says Ginsburg.

Third-party ownership. In a leasing arrangement, the solar company installs and maintains the solar equipment for a fixed period, typically 20 years. After that, there’s the option of purchasing the system at a significant discount, just like a car lease. Co-ops and condos can pay an agreed monthly fee that’s based on the estimated amount of power their system will produce in a year. Or they can pay for the actual power used at a set per-kilowatt-hour rate, which means that their electric bills will vary from month to month. In December 2016, Solar One announced Affordable Solar New York, a pilot program that is making zero-down financing available for HDFC co-ops interested in adopting solar power.

For small and medium-sized co-ops, another option has recently come into play. Under a new financing model put together by Zero Carbon Corporation and the NYCEEC, co-ops are able to install rooftop solar panels without putting any money down. When it comes to solar, the sky, for the time being, is the limit.

Adapted from the New York City Multifamily Solar Guide. For more information visit their website.