When you walk past a neighbor’s house with solar panels on the roof, you might envy their low electricity bills or be impressed by the clean energy they’re generating. What you might not realize is that they probably don’t own their solar panels and are paying monthly to rent them. A new startup we’ve selected for our portfolio has a solution designed to help homeowners actually make money from the solar on their roofs.
Solar leases were invented as an inexpensive option for homeowners to get solar panels. Solar panels themselves used to be very expensive: five years ago, the total up-front cost to outfit a roof was about $50,000. Because of that high cost, leasing solar has become by far the most popular option. Last year, 70 or 80 percent of people who added solar on their house in California, Arizona, or Colorado signed a lease.
That made sense then, but over the last two years the prices of panels have fallen dramatically. Thanks in large part to advances in Chinese manufacturing, the average price of solar has fallen to $20,000 per home.
As with a car or a house, most people buy solar if they can afford it. Leases and rentals mean lost value.
The real sting from leasing solar is that the company keeps the tax credits from installing the panels on your house ($7,500 from the federal government plus any state or local). You also miss out on the opportunity to increase the value of your home; you only get that bump in value if you own the panels.
So why are people still leasing? Until now, it took a lot of effort and some serious DIY work to buy and install solar yourself. There are literally thousands of panel options, multiplied by the many configurations to mount it to your roof, and figuring out tax credits is really tricky.
Kiwi, a startup company we’re working with at Greenstart, wants to simply this process so homeowners can own solar just as easily as they can lease it.
Kiwi packages together everything you’d need to go solar in a bundle called a Juicebox. They have five sizes of solar systems to choose from, deliver all the parts in one big box, match you with a local installer, and then help you cash in on tax credits.
Kiwi co-founder Nick Yecke claims the lifetime value a homeowner gets from a mid-size Juicebox is $70,000, when you include savings on energy bills, tax credits, and increase in home value. This can even be as much as $106,000 in Long Island, thanks to generous tax credits. In comparison, a solar lease has a lifetime value of about $12,000, made up of a 10-20 percent discount on energy costs.
Solar leases aren’t a bad option, and they were a necessary step in making solar available to the average homeowner. But comparing apples to apples, owning solar is a much better investment in the long run.
Yecke says the biggest obstacle to getting Kiwi to customers is helping them understand the lifetime value of their systems, and opportunity for homeowners to cash in on big tax credits. Kiwi is currently active in Colorado, Florida, North Carolina, New York City, Chicago, and northern California.