Power Outages, Safety and Savings
Power outages and extreme weather conditions are on the rise, causing increased disruptions to grid-tied power supplies, preventing families and business owners from having reliable access to power. Installing energy storage in your home or business is a practical way to build critical back-up reserves so you have power 24/7. Energy storage keeps you safe, maintains the lights and other essential equipment, and even saves you money on your monthly electricity bills. Add solar generation to your system and you create your own personal power plant, adding to your energy security and monthly savings.
SimpliPhi Your Finances and Own Your Power
Owning your own power, generating it, storing it, and using it when and how you want means you have control – over your life, your security and your savings. SimpliPhi Power works with financing partners to help you achieve control over your power and own it – not give it away to 3rd party leasing institutions that own and take control of the assets in your home or your business – ultimately your power.
Below, we explore and compare some of the differences between 3rd party leasing solutions and the financing options that are available that either support you in achieving your goals to own and operate your power, save money and protect the value of your home – or that don’t.
Owning & Controlling Your Power or Leasing It From 3rd Party Investor Owners
One of the trends in recent years has been to lease your power from a 3rd party who owns the energy storage and solar generation assets at your home or business and sells power and services back to you. While ‘no money down’ may seem like an attractive offer, there are important considerations and lots of fine print to keep in mind before signing a contract.
Property Value & Mortgages
When you sign a 3rd party lease agreement for critical energy storage back-up or solar generation, the equipment is not yours and becomes attached to your home or business, typically for 20 years – and that contract will definitely make it more complicated for you to sell, effectively lowering the value of your home or building.
If you decide to sell your home or building, potential buyers will have to go through additional credit checks and applications to assume the 3rd party leasing contract. Due to the added scrutiny and credit requirements by the 3rd party owners of the renewable energy equipment, potential buyers may not qualify and even back out of the sale altogether. Interested buyers may also ask that the homeowner buy-out the remainder of the lease agreement if they are not comfortable with the terms. And the 3rd party owner that leased the equipment might seek to renegotiate the equipment lease with the potential buyer, raising the rates or disqualifying them entirely.
Real estate agents are reporting increasing challenges and complexity of selling homes with leased 3rd party equipment which may translate into headaches and a lower home or building value in the future. Home and building owners that own their renewable energy equipment, rather than lease it from 3rd party owners, may gain as much as 20% more in their selling price than similar listings in the real estate market that do not have renewable generation and energy storage on-site. Those with leased systems could sell for 10% less, equaling tens of thousands of dollars in property value losses at the point of sale.
Refinancing and Impact on Your Credit
Equally concerning for you, leasing a solar or battery storage system can make it very difficult to get a mortgage refinanced. In some cases, the 3rd party leasing company may place a lien filing on your property to ensure that they are the first debtors to be paid off. Having a lien against your property is a major red flag for mortgage companies and will complicate the process, if not prevent you from refinancing entirely.
Additionally, the 3rd party lease payment itself and your outstanding balance will be factored into your debt-to-income ratio, which could make the terms of any potential mortgage or refinance opportunity more expensive, eroding the value of the energy storage and solar generation equipment for you personally.
Loss of Control
Other drawbacks of leasing renewable energy and battery storage equipment from 3rd party companies are the ways in which you will lose control – of your energy decisions, of some of your property, and of the equipment itself.
First, lease agreements are based off your average electricity consumption, and any changes may be forbidden under the lease terms. Whether you want to lower your usage through a more efficient air conditioner or make the switch to an instant electric water heater – any change to your electric consumption may undermine the original terms to the leasing contract, which can violate your agreement, preventing you from making these cost saving-upgrades in your home or business. If you want to remodel or add an addition to your home, permission must be obtained through the 3rd party leasing owner, since these upgrades can also change your average electricity consumption profile.
Next, since a third party owns your equipment, they are also protective of it. If solar panels are installed on your roof; you may lose access to your own roof. Any repairs or upgrades could require the 3rd party leasing company’s approval. If a leased energy storage system is in a utility closet or part of a garage, you may not be allowed to enter that space, even for basic maintenance, in order to protect the leasing company’s investment. Basically, you can lose control over using or entering a space or your right to maintain equipment in your own home or business.
Finally, you don’t own the equipment! That means when your lease expires, they will reclaim their property and the energy savings you might have continued to gain along with it – for years to come. The company will also install as much or as little solar or batteries as suits their bottom line, not according to your needs or financial objectives. And the 3rd party leasing company will also determine the location of the system and how it is installed, meaning you can’t control how visible the equipment is or where it is placed or who the installer is.
Overall, there are many drawbacks to the ‘no money down’ 3rd party leasing offers that you will see advertised that can completely undermine the purported benefits. Most home and business owners will benefit and gain more value from owning their own power and controlling their own energy decisions than giving that control away to 3rd party leasing companies.
Financing Options and Incentives to Own your Power
Many people lease their renewable energy equipment and battery storage system from 3rd party leasing companies because they want to avoid the upfront cost. But there are financing alternatives available that do not pose the disadvantages of the 3rd party leasing agreements described above.
Financing Options with SimpliPhi Power
SimpliPhi partners with several nationwide financing companies to offer you beneficial financing options that meet your needs so that you can own your power, now and into the future. Whether you are a home or business owner looking to invest in energy storage solutions, or an installer looking to complete a project, we have financing solutions to meet your project objectives.
Mosaic is a national leader providing flexible financing and loan options for homeowners that provides several different terms and options for projects of all types. Mosaic will also work with installers and contractors to help them determine the best options for their projects, to help them provide turnkey solutions for their customers.
Loanpal is the ‘World-Positive Lender’ that focuses on providing friendly financing options for those who dream of living a more sustainable lifestyle. Loanpal is best known for their work with energy system installers and contractors, but they also work with homeowners and business owners directly.
Sunlight Financial partners with renewable energy companies and home improvement contractors to secure financing for solar systems, energy storage and other home improvement projects. Their loans have a simple approval process and no pre-payment penalties, making them a great choice for installers seeking financing solutions on behalf of their customers.
Incentives and Rebates
For renewable energy and energy storage equipment, there are a number of federal, state and local incentive and rebate programs that homeowners and businesses can take advantage of.
Most notable is the Investment Tax Credit (ITC), which provides a tax incentive for purchasing clean energy equipment. The ITC for 2021 is currently a 26% federal tax credit claimed against the tax liability for those that invest in solar energy and energy storage systems. Take advantage of the ITC along with financing your energy storage and solar equipment. Your state or local jurisdiction, and even your utility, may also offer additional incentives, grants, or rebate programs. The DSIRE website (www.DSIREUSA.org) is a helpful database that you can search for additional upfront cost saving opportunities in your area.
Home Equity Loan
Another affordable option is to secure a home equity loan or home equity line of credit. Because your property serves as collateral, these options have affordable interest rates, and any interest you pay is tax deductible, just like a mortgage. Equity loans with fixed interest rates can range from 5- to 20-year terms. Equity lines of credit typically have variable rates and last 10 years (so interest rates may change over time).
All these financing and rebate options empower you to own your power, finance equipment to defray upfront costs, pay reasonable rates over time and protect your home or business from power outages and rising utility costs.