Owning and Leasing Photovoltaic Systems Reaches Its Climax When Selling Homes

Leasing Photovoltaic Systems in Van NuysFor most people, the concept of relocating means gathering all of their possessions and selling their house. It’s been pretty much the same all this time, making the process seem so easy. More than that, the aim has been the same since: to earn as much as possible from the sale of a home. Whether for the agent or seller, the general consensus has always been to simply get more. After all, uprooting is hard and managing the finances related to it is one of the most crucial matters of it all.

For some California residents, though, there is something particular that could help the sale or hinder it altogether: photovoltaic (PV) systems. In some neighborhoods, this cutting-edge cost cutter is common, but even though the likeliest buyers to check out homes with PVs have cash to burn, it still depends on the kind of arrangement and how familiar they are with the benefits of using solar power.

There are only two kinds of PV “ownership”, according to Canopy Energy: one is via outright purchase and the second is via power purchase agreements (PPA). The latter isn’t really a purchase, but a lease. Elon Musk’s SolarCity is probably the biggest PPA provider people have heard of, and with more 100,000 clients, leasing PV systems does appeal to a certain demographic.

When selling a house, however, there is evidence that a PPA contract has an adverse effect on the selling potential of a house. For the most part, sellers were the ones who had to make the compromise.

Solar Drag

A Bloomberg report made it clear that there are advantages and disadvantages when a PPA contract comes with a house, but sellers usually experience the negatives. There are examples in the article where the seller had to lower the price because of the inclusion of a leased PV system. In another case, potential buyers backed out as soon as they heard that they have to inherit a PPA contract.

One of the biggest factors why people back out of homes with PPA PVs is the contract. Typical leases can last up to a decade, maybe even as long as 30 years with some properties. This proves too much for families who already have to worry about mortgage and other costs of a new home.

Even if a buyer agrees to take on the PPA, the provider still has to agree with the new homeowner. They usually base it on credit history, so if a buyer has a mortgage, they will probably get the contract. But, in the event that a buyer is on another financial plan, it makes the deal more challenging.

The Initial Cost Returns

On the other hand, outright ownership is something extremely beneficial, especially to California residents. Buyers are more open to choosing among homes with renewable energy systems, the state being the renewable energy capital of the country.

More than that, owned PV systems will improve a property’s value. The Department of Energy proved the trend with an extensive study of sales data gathered from 23,000 homes. They found out that buyers are willing to pay a premium of $15,000 per 3.6 kilowatts, or the size of a regular property.

In the same Bloomberg report, the utility can go down to $160 from $250. This means significant savings for the new homeowners well into the foreseeable future, potentially cutting $800 from their yearly energy costs.

Whichever way anyone looks at it, buying a PV system will pay off eventually. Since it’s a premium extension, it will command a higher fee today. But, who’s to say that it won’t have the same effect once it’s as common as lightbulbs? For now and the immediate future, PV systems are profitable in all fronts.