Most solar panel systems fall into two categories- owned OR leased/power purchase agreement (PPA). Home buyers can be leery about leased systems, with good reason. Aside from the occasional water heater, what other integrated component doesn’t transfer ownership at the time of sale? Sometimes, it’s the solar panels.
Solar company contracts are not standardized, but there are some terms that are fairly common. Generally speaking, a lease doesn’t always have a buy-out option where a PPA usually does. Leased/PPA systems are sometimes installed on roof tops that have a life expectancy which is shorter than the lease period. If a sale of property is eminent, you want to find out the solar company’s plan for removal and reinstallation of the panels should the house need a new roof in the future. Some companies have relationships with roofing contractors and will handle this for free, provided you use their roofers.
All of that might seem like a future headache to a buyer, so here is how to sell the benefits. Your solar contract most likely includes a rate for any kilowatt hours that aren’t produced by your panels. What is that rate and how does it compare to the standard rate? It is most likely set at a deep discount from what your neighbors are paying. The system size was designed to offset your prior year’s usage but buyers may have increased needs and this is an opportunity to show value. Does the buyer plan to purchase an electric vehicle (EV)? With unstable fuel prices, they can benefit by charging their EV at a fixed rate per kilowatt hour. Does your boiler run on oil, also an unstable rate per gallon? The buyer can install a ductless heat and air conditioning system (a.k.a “mini-splits”) and supplement their heating using electricity at a reduced, fixed rate.
When marketing a home with a leased/PPA system, it’s important to have these talking points scripted for ease of communication. Once a buyer has toured your home and can see themselves living there, we need them to be clear and confident to make an offer, without uncertainty over the solar panels.
One last thing to note is that any solar lease/PPA will be factored into the buyer’s debt-to-income ratio (DTI). Yes, it cancels out the electric bill but lenders still see it as an added cost per month. If a buyer’s mortgage pre-approval letter states a certain budget, it’s vital to contact the lender and ask “Can this buyer’s DTI support the extra $____ per month for the solar lease?”. If the answer is no, it’s probably time to move on to another buyer.