Path-Q Solar

How should a lease payment be compared with the expected electricity bill savings?

Answer

Compare the lease payment with the electricity costs the system is realistically expected to avoid, using the same time period and including all relevant changes. The basic comparison is avoided electricity cost minus the lease payment and any remaining utility charges, but the result varies with production, consumption, utility pricing, export compensation, and lease escalations.

Key points

  • Model monthly and annual net cash flow rather than comparing the lease payment with the entire historical bill.
  • Separate electricity charges the system can offset from fixed utility charges it cannot remove.
  • Include degradation assumptions, expected production, export treatment, maintenance responsibilities, and any lease escalator.

What it depends on

  • System production estimate
  • Household electricity use and timing
  • Utility rates and export compensation
  • Lease payment and escalation structure
  • Remaining utility fees and contract charges

Risks and trade-offs

  • Lower-than-expected production can reduce savings while the lease payment continues.
  • A lease may provide payment predictability but usually does not give the homeowner ownership of the equipment.
  • Savings can be overstated if the calculation assumes all historical bill charges are avoidable.

Information you may need

  • The lease payment schedule and escalation terms
  • A production estimate based on the proposed design
  • At least one year of interval or monthly electricity use and bills
  • The applicable utility export and billing rules

Your next step

What to do next

Build a month-by-month comparison of projected avoided utility costs, lease payments, remaining utility charges, and contract escalations.

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SQ01199