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The Truth Behind free solar programs
If you live in Hawaii and have been interested in going solar, then you've probably seen ads about "Free Solar" for your home. The truth is, there is no such thing as "Free". Typically companies that are making this claim are offering home solar through what is called a Solar Power Purchase Agreement. A Solar Power Purchase Agreement is a fancy word for a lease. Meaning that you do not own the solar equipment on your home. Nor do you own the electricity it produces. You simply lease the equipment on your home. Keep reading to learn more about (SPPA) Solar Power Purchase Agreements.
What is an SPPA?
A Solar Power Purchase Agreement (SPPA) is a financial arrangement where a third-party developer takes ownership, operation, and maintenance responsibilities of a photovoltaic (PV) system. In this agreement, a host customer agrees to have the system installed on their property and purchases the electricity generated by the system from the solar services provider for a predetermined duration.
Pros & Cons of SPPA
Pros:
- Often little or no upfront cost to have solar installed.
- Maintenance is handled by the leasing company.
- Reduce carbon emissions by going solar.
Cons:
- You do not own your solar system.
- You do not own the electricity it produces, meaning, you can not sell the excess electricity back to the grid.
- If your system does not meet 100% of the electricity load, you are still required to pay an electric bill. Having 2 payments now.
- Leasing agreements can make it challenging to sell your home, requiring the new owner to take over that lease if they want the property.
- More complex negotiations and potentially higher transaction costs than buying PV system outright.
- You do not get any of the eligible tax breaks or benefits of having a solar system installed. The installing company does.
- Site lease may limit ability to make changes to property that would affect PV system performance or access to the system.
- While SPPA rates can be set at a fixed value, it is more common for them to include an annual price escalator ranging from 1 to 5 percent. This adjustment factors in various aspects such as the decrease in system efficiency over time, inflation-related cost increases for system operation, monitoring, and maintenance, as well as anticipated rises in the price of grid-delivered electricity.
- Lengthy leases, sometimes up to 25 years.
- Minimal savings on electricity, as the leasing company sets the rate at which they sell it back to you.
What is a better option than an sppa?
Installing Solar on your home can be a significant investment. That being said, there has never been a better time to purchase your own home solar system. If you do not have the capital to make the investment up front, there are various financing options to purchase your own system. This is different than a lease, it is a loan that allows you to finance the cost of solar, while still allowing you to take advantage of all the benefits of purchasing your own PV System. Best yet, allowing you to truly own your own electricity and become grid independent.
Solar Incentives purchasers can take advantage of
federal solar investment tax credit (ITC)
The Federal Solar Investment Tax Credit (ITC), commonly referred to as the Green Energy Tax Credit, is a solar incentive that enables homeowners and businesses to receive a federal tax credit worth 30% of the total cost of their solar energy system, including installation expenses. This tax credit has the potential to result in HUGE savings for individuals and businesses who invest in solar power. Ultimately making the cost of solar much more affordable.
Hawaii Renewable energy technologies income tax credit
Apart from the federal ITC, residents of Hawaii can take advantage of a state tax credit for solar energy systems known as the Hawaii Renewable Energy Technologies Income Tax Credit. This program allows homeowners and businesses to claim a credit of 35% of the total cost of their solar energy system, or up to $5,000 for residential systems and $500,000 for commercial systems, whichever amount is lower. By utilizing this state tax credit, Hawaii residents can further enhance the financial benefits of installing solar power systems.
*ProVision makes no binding claims or guarantees regarding the accrual of tax credits and depreciation dollars from the purchase of a solar electric system. Consult with your tax advisor, accountant, IRS or Hawai'i Department of Taxation for eligibility requirements and details on how these credits should be calculated for your own individual or corporate situation
For tax forms or more information on available tax credits please visit the following links:
Tesla Powerwall 3 Energy Storage
Another huge benefit of owning your own system is the ability to store your excess energy. The Tesla Powerwall is a rechargeable lithium-ion battery system designed and manufactured by Tesla, Inc. It is intended for home energy storage and is typically used in conjunction with solar panel systems. The Powerwall is compact and wall-mounted, making it suitable for residential installations.
The primary purpose of the Tesla Powerwall is to store excess electricity generated by solar panels during the day. This stored energy can then be used during times when solar production is low, such as at night or during power outages. By storing and utilizing renewable energy, the Powerwall helps homeowners reduce their reliance on the traditional electrical grid and can provide backup power during emergencies.
The Powerwall has a capacity of 13.5 kilowatt-hours (kWh) and a power output of 5 kilowatts (kW), making it capable of supplying a significant amount of electricity to power various household appliances. It is connected to the home's electrical system and can be controlled and monitored remotely through the Tesla mobile app.
At Pro Vision Solar, we believe that an informed buyer is a smart buyer, that's why we take the time to explain the different options that are available to consumers when it comes to switching to solar. We have been serving the Big Island and now Maui for over 20 years, and have been trusted with hundreds of installations. Contact us today to learn more and receive a free solar analysis on your home. We make the process of purchasing your own PV system easy, and pride ourselves on competitive pricing, exceptional customer service, and second to none quality of installations!