Will your solar purchase be Cheque, Savings or Credit?
Do the benefits of solar leasing in Australia outweigh the traps for young players?
It’s a given that Australians, perhaps more than any other nationality, prefer ownership over leasing or renting. Etched into our history of suspicion of authorities and banks, this is expressed most clearly in “The Great Australian Dream” — to completely own one’s own home or block of land.
This preference to be one’s own master is also true of domestic solar arrays. The preference for homeowners has been to buy their solar panels outright. However this may not be possible for all and new solar leasing models which have become popular overseas are now being introduced into the Australian market. Supporters of the model claim it provides access to solar energy where none was previously available.
The product is taking off in countries such as the United States and Germany where the financial innovation has been necessary to cater for a growing market. Those who want to purchase solar panels (for environmental or cost benefits) but either haven’t got the cash to buy outright or are without a sufficient credit rating to obtain a loan.
However overseas evidence suggests there are pros and cons to solar leasing. As the generous feed-in tariffs of the past fade into oblivion, subsidised PV systems are now a distant memory in most parts of Australia. So does solar leasing in Australia then provide a viable option?
Like all leasing models, there can be a down side. Problems arise of course when the homeowner decides to sell the property. Arranging to transfer the lease upon sale, or to pay it out before sale may prove to be problematic. Also the cost of leasing over the term of the agreement is far more than paying up front for a solar array.
The model is a comparative newcomer in Australia however solar companies such as SunPower are already offering a type of leasing arrangement with a zero deposit. The company is trialling the product with the selling point that it offers a form of certainty — that magical word to solar energy consumers — in an increasingly uncertain playing field in renewable energy in this country.
In an interview with RenewEconomy at the launch of the leasing model, director of solar ESP for SunPower Australia Kevin Whelan said his California-based company offered that certainty.
“Our program gives a certainty about the cost of energy when there is uncertainty with everything else,” Whelan said. “Irrespective of what happens with the RET, it gives rooftop solar customers long-term certainty on their electricity prices.”
Is solar leasing in Australia the new financial model of the future? Or should Australians stick to their instincts and save up to buy their solar panels up front (or add it to their mortgage at the current low rates) ? The answer may be that it suits some, while it may not be for others looking to take control of their bills with solar.
As always we’d be interested to hear your thoughts on solar leasing in Australia. Specifically we’d like to know: Is this the financial renewable energy model of the future? An affordable way to access green energy for many currently shut out of the market? Or should the model be viewed with suspicion, as another way to end up in more debt that may be difficult to transfer?
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Hi Rich,
My personal view is that leasing is too complex (usually with a jaw dropping APR) for most buyers when many can simply add it to their mortgage for a few bucks a week if cash is not an option:
http://www.solarquotes.com.au/blog/solar-leasing/
Finn
Totally agree, Finn. You’ve simply changed your utility company. The real plus, I guess, is that your provider is more environmentally focussed.
Re Rich’s question “Is this the financial renewable energy model of the future?” is unlikely to have us raiding our digital wallets to lease SESs from a California-based entity.
It’s to be hoped that the ideal future energy model is in efficient storage, freeing more of us from polluting energy companies, until dirty energy models are dinosaurs of the past… . Once that happens, energy providers here are more likely to look to sun, wind and water as cleaner options.
Thanks Finn. Anyone else think the same way?
Hi Rich,
I see only one solution and it is not leasing. There are now people going around selling solar systems and taking deposits from customers. These sales people are not the installers. They tell their customers to contact them when they have received information from Ergon that their grid connection has been approved. Some of my friends signed up 2 months ago and they haven’t heard yet of their approval from the grid. Personally I have been waiting more than 2 months.
So, back to leasing: NO, go hybrid. No export to the grid and you can have as much solar as you like and no waiting for grid approval. My panels are sitting on the roof looking good for the birds, but when the batteries arrives it will be working without the grid.
Why are these leasing companies leasing if it wasn’t to fleas you? Just like banks and the rest of the vulture pack. Go Hybrid, and be your own boss.
Cheers
john Nielsen, Silkwood
Hi Rich,
You’re absolutely right in saying that Australian consumers like to own their assets – this is a well established cultural difference between consumers in the USA v Australia. I also suspect that Australians obtain their sense of certainty through being able to “walk away” from a deal, and that means avoiding the “lock-in” nature of long term power purchase agreements. Financing models for commercial solar, on the other hand, is a different story.
If only those consumers who are tight for cash or who have poor credit take up residential solar leasing in Australia, then this might create problems for investors in the Asset Backed Securities that ultimately fund them.
The well established methods of financing solar in Australia have been through the customers own cash or their mortgage. I think an exciting concept involves financiers providing discounted residential & commercial Solar Mortgage packages for Australian solar owners who have very good credit – which most of them are likely to have. A Climate Bond made up of Australian Mortgage Backed Securities, with solar on the roof of every property, would certainly be appealing to institutional investors around the world.
Regards,
Matt
I don’t think house/land and solar PV system ownership, leasing or renting is a fair comparisom as house and land ownership has an element of permancy where PV systems have a finite and maybe even an undefined life span more like a car. I would be asking if anyone has right of acsess to the PV equipment and who is responsible for maintance or ensuring continuing output.
Steve.
Excellent feedback thanks everyone.
It does seem that Aussies prefer ownership over leasing which may make this model hard to get off the ground here in Oz. Any suggestions as to how the leasing structure could be tinkered to improve take up? Or am I flogging a dead horse here 🙂
Rich