Solar Energy for ZERO OUT-OF-POCKET – What are my Options?

Posted on: February 12, 2016

by R. Sail Van Nostrand

We often hear, ‘I’d rather lease because it’s Zero out-of-pocket.’ That’s a bit of a misnomer, so we’d like to set the story straight.

ZERO OUT-OF-POCKET can be achieved in one of several ways:

A PPA (Power Purchase Agreement) is a contract in which someone else owns the equipment and you agree to pay them for the energy delivered at a preset cost intended to be lower than your current cost of electricity. PPAs come in both fixed rates or escalating rates, each for 20 years. Federal Tax Credits are taken by the owner of the equipment and the New York Tax Credit is taken by the homeowner. This model can result in savings but does not yield a fixed payment schedule and often payments will escalate over the 20 years. Often annual energy output is not guaranteed.

A lease is a contract in which someone else owns the equipment and you agree to pay a fixed monthly fee for the use of the equipment. The energy is yours to use to offset your utility bill. The equipment owner (the leasing company) gets the Federal Tax Credit and the homeowner gets the New York State Tax Credit. The monthly lease payment is the same regardless of how much energy is produced each month. Annual production guarantees are the sign of a ‘good lease’. Some leases start with a lower monthly cost, but have annual escalation; other leases have a fixed monthly payment, each have a 20 year term.

solar_incentiveOften times purchasing a solar electric system yields the largest savings. Financing is readily available for homeowner for zero out-of-pocket. Monthly payments are typically similar to the monthly payments of a lease with loan terms between 10 and 15 years (lease term is typically 20 years). A well-designed purchase solution should yield immediate monthly savings (like a lease) with payments lasting only 10 to 15 years, resulting in much larger overall savings than the lease. All Tax Credits come back to the homeowner and can be financed at no interest and no payments for a year to allow the customer ample time to file their tax return and receive their tax credit money. Some purchases with financing options can be found with system performance guarantees as well.

For the customer with the ability to purchase a solar electric system outright with their own funds, zero interest and zero payment bridge loans are available for the tax credits, and these projects yield the highest savings as they have no finance interest involved and return on investment often approaches 10%.

Typical costs associated with each form of solar electric acquisition are:

PSEG: 19₵ per kilowatt hour (kwh) currently
PPA: 14₵ – 15₵ per kwh plus escalators (usually 2.99% yearly escalation)
LEASE: 16₵ – 17₵ per kwh fixed
FINANCED: 9₵ – 10₵ per kwh fixed
PURCHASE: 8₵ – 9₵ per kwh fixed

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  • Victoria Northport

    Energy by Choice was one of our best decisions: Professional, intelligent gentlemen, on time, kept to schedule, neat, proficient, excellent in customer service. The sales, the office, the installers, everyone.. My PSEG bill is $12.00 a month…….yes loans to pay for installation, once that is paid off ….$12.00 a month. We love our solar panels, beautiful, energy efficient, less pollution, better for the environment and my son’s future.

  • Joe West Babylon

    Great Installation, Great Company, Great People. This is the first time I’ve ever dealt with a contractor and the estimate was exactly the same as the proposal !!!. No out of pocket expense. By the way I interviewed 8 companies. Energy by Choice was a pleasure to deal with. No buying pressure. My solar has been installed for 16 months. My electric bill was $350 a month. My connection charges average $12 a month. I’m saving $338 a month!

  • Mike Bethpage

    Very professional. Got They helped set up the financing, the permits and gave me the system that I wanted. After all the incentives I paid $16,000, but my bill is still over $100 cheaper than my budget payment. They also follow up with suggestions on how to get the most from your system. Sail’s the best.

  • Raymond Port Jefferson Station

    I am very pleased with my selection of Energy By Choice. Sail designed a system to virtually eliminate my electric bill. I chose to own the system so I would benefit the most from the savings.

  • Ginny Amityville

    A delightful experience. Delightful, efficient team of installers. Can’t wait to see my savings and the difference in my PSEG bills.

  • Ralph Lindenhurst

    We are extremely happy with our experience so far with Energy By Choice & Sun Power. From the sales dept. to the installation, everything went very well. Steve, Kelly, Sail & Evelyn as well as the install crew are all very knowledgeable and professional. Thank you for getting us “green” & for enabling us in the near future to tell PSE & G to take their highest energy rates in the country & stick it where the “Sun don’t shine

  • Ralph Smithtown

    Energy By Choice did a great job! The job was neat and clean. The guys were great. My panels are awesome! I would recommend Energy By Choice to anyone. I have central air, pool and hot tub, electric stove and dryer. Good bye electric bill!

  • Judy Mineola

    Helpful, honest; enjoyed the experience of the office personnel, (no pressure) from initial phone inquiry to certificate of completion. Getting better than half the cost returned from the State & Federal Gov. helped even more. Only thing left is to reap the rewards of the investment of our home & future. I would recommend Energy By Choice as a preference over the other companies who tried to push & sell their products to us.

  • Arlene Commack

    Our solar panels were installed last week. Now that the entire process is done, if you’re thinking about solar panels, this is the company to call. Professional, prompt, courteous and a clean job. Thanks again to Sail and his team of experts. We love our solar panels and, even more so, we love watching the meter run backwards!

  • Kalli Port Washington

    I had solar panels installed by Energy by Choice three years ago. I was pleased with the installation. The crew was professional, polite and knowledgeable. Ongoing support for questions and minor items that needed attention is prompt. I really like seeing no electric bill and credits to my account if I produce more electricity than I use. I would recommend them to others

  • Kalli Port Washington

    I had solar panels installed by Energy by Choice three years ago. The crew was professional, polite and knowledgeable. Ongoing support for questions and minor items that needed attention is prompt. I really like seeing no electric bill. I would recommend them to others.

  • Sue New Hyde Park

    Energy By Choice installed my solar several years ago and have yet to pay more than the mandatory few cents a day service fee by the electric company. While I have had no problems with my system, I have had questions and Sail Van Nostrand is always attentive to me and responds to my inquiries quickly and professionally. I whole heartedly recommend Energy By Choice to anyone looking for a solar contractor.

  • Ruth Ridge

    I’m happy would be an understatement. I’m ECSTATIC!

  • Mike Ronkonkoma

    Received my bill today. It was only $11 dollars and change. Not bad

  • Suzanne Huntington

    Great company! Very professional and pleasant to work with. Everyone I dealt with was friendly, knowledgeable and informative. I LOVE my solar panels and especially my non-existent electricity bill! I only wish I had done this sooner! I highly recommend this company!

  • Gene Brentwood

    Very glad I chose Energy By Choice as the people to install my solar system, every thing went smoothly and thanks to their system 3/4 of my electric for the first year is being supplied by the sun. And their monitoring of the system works like a charm. Would recommend them to anyone!

  • Mike Remsenburg

    Awesome-Producing more than what was estimated-SWEET!

  • Chris Farmingdale

    I’m still loving my panels! Now that I’ve retired, the LOW energy bills are MOST welcome! What other investment can you make that can produce savings like that? I’M HAPPY!

  • Anthony Mattituck

    It was a great thrill to see our electric meter running in reverse after the installation of our system. We look forward to many years of gaining some energy independence from the high cost of electric on Long Island.

  • Mike Long Beach

    I wish to reduce my energy usage and dependence and to show my children that they can be part of this too. Today my newly installed Solar Electric system produced 36.22 KwH of electricity from our SUN! That is enough electricity to light 362 – 100 watt light bulbs for one full hour. We could not be happier.

  • Christine Farmingdale

    Still the best thing is $5 and $10 electric bills! How I love it How about saving approximately $1500 per year! I’m so glad I put up my panels.

  • Jerry Baiting Hollow

    From the start your approach was professional, and every step of the way you clearly and accurately represented the parameters of the project. The only surprises that we had were positive ones: the neatness of the work was exceptional and the effect of the solar cells on our electric bill exceeded our expectations. Hopefully solar energy will become a more common option on Long Island for both electric and for hot water. It provides an opportunity to help the environment, contribute to our country’s energy independence and to benefit from the financial savings over time.