Editor's note: This is part 2 in a series of three posts. Part One

Mayer’s issue isn’t with the model.

“Leasing makes sense for nonprofits like churches and schools,” he said. “Also for retired people who have no income and it may make sense in cases where people are fully apprised of the risks.”

He said the problem is that solar leasing companies build escalators into their contracts, increasing the price of the solar electricity on the roof each year by 3 to 5 percent. And they use charts showing historical data with utility electric prices going up an average of 5 to 7 percent each year.

“They need to say that to justify the escalators in their own contracts,” Mayer said.

The problem is that utility electric prices have not been going up that dramatically in recent years.

“The three major utilities in California over the past five years have been flat to down,” he said. “PG&E is up just slightly.”

The problem for the solar industry will come if homeowners find themselves paying more for their solar contracts than they would pay to the utility company. It will hurt their real estate values, leave people disillusioned with the industry and hurt growth in the long term.

Mayer admits that the long-term trend in utility electric prices is upward and over a 20-year period it’s accurate to say prices have climbed 5 to 7 percent a year.

“But, to predict the price is going to continue to go up like that is dishonest,” he said. “It would be like a stockbroker saying a stock is a good investment because it’s gone up every year for the last 30 years. And maybe 10 years ago that would have been true, but look at what’s happened to the stock market now. Past performance is no indicator of future growth.”

Just as trends like constantly rising real estate prices and ever-growing value in the stock market have shifted in this economy, so has the cost of utility power generation, he said.

Good for the industry and betting on the odds

Danny Kennedy, co-founder and president of Sungevity, another solar leasing company, said the leasing model isn’t out to dupe the customer. His company and others like his have a singular motivation, he said – to make solar more accessible.

“The reality of the solar leasing phenomenon is that it’s a choice,” Kennedy said. “It gives consumers another option.”

Wise likened the rise of solar to the advent of direct TV.

“People were spending thousands of dollars on these satellite dishes,” she said. “And then they realized, they didn’t want the dish, they just wanted the service. People don’t want to own the solar panels. What they really want is the power they produce.”

Leasing companies allow homeowners the option of having solar power without having to maintain or care for the panels.

Story continues on next post to be published Wednesday, Sept 19, 2012
Part One