We chose to lease rather than buy. A number of companies now offer leases on solar power systems, usually for a 20 year period, where they own and maintain the system, act as general contractor for procurement and installation, and handle the tax/permit/utility paperwork. Leasing was cost-competitive with buying -- and far less hassle and paperwork. The leasing company offered a choice of a monthly fee or a one-time payment. The one-time payment is a far better deal; the monthly payment basically represents financing at 7%. The install was completely hassle-free. The system uploads data to a monitoring site, so you can get graphs and reports of your production.
In Vermont, there are three sources of subsidy for solar: a 30% federal tax credit, a state tax credit based on generating capacity (which came out to about another 10%), and utilities buy your generated power at a premium. (Some utilities will only give you a credit; ours (Green Mountain Power) will cut a check for any credit balance at year end.) With a lease, the leasing company gets the tax rebates (which reduces the cost of the system) and the homeowner keeps any payments for the power generated, and the leasing company handled all the tax paperwork and associated risk.
I was apprehensive about whether to believe the projected generation capacity; with a month of data, I am gaining some confidence that they were reasonable. Based on these projections (and assuming that power rates stay the same), the system should offer a ten-year payback and a 8% return on investment. In hindsight, I would have gone with a slightly bigger system (there's still plenty of room on the roof); the standard approach seems to be to size the system to net out your power bill to zero, but this seems more of a psychological than financial target.
The key risk items are:
- Generation. The system may generate less than projected, though the first month looks promising. (To meet their targets, I need to average generating 26 kWh/day through the year. In May, we averaged 38 kWh/day; I would expect to generate even more in July/Aug and much less in Jan/Feb, but it is believable that we will hit this average.) Even if the projections are accurate, we are of course still dependent on weather.
- Changes in utility policy. Green Mountain Power offers an effective 7c/kWh subsidy on top of the regular tariff for any power we generate. However, the company could change this policy, and probably will sometime in the next twenty years.
- Change in power rates. If power rates go up, the return is better; if power rates go down, the return is worse. I have to assume over 20 years electric rates will go up.