US PREF notes as well that even if depreciation were factored into the equation – and depreciation isn’t specific to the solar industry, of course – the government would still break even with the ITC. “Monthly payments for electricity, made by residential and commercial customers, constitute taxable income for the lease or PPA provider; as such, the value of taxes paid on this income more than offsets the value of the ITC,” the study states.
While installing and owning a system can still be attractive for some homeowners and businesses, particularly in states and localities that offer generous feed-in tariffs, leases and PPAs have become the most common way to get in on solar. With little or no upfront costs, homeowners and businesses are immediately able to lower their electricity bill.
Of the people in California who go solar, 70 percent now do so by leasing the panels or by buying their rooftop power, according to a recent PV Solar Report. This method is helping open up solar to demographics beyond the old core constituency of upper-middle-class and upper-class citizens, too: Analysts with the U.S. Department of Energy’s National Renewable Energy Laboratory say the model is being adopted in less affluent neighborhoods that had avoided customer-owned systems.
The burgeoning market for solar leasing has led to a number of companies emerging in recent years, including SunRun, Sungevity and SolarCity. SunRun pioneered the practice in 2007 and still leads the market, claiming to have installed $1 million worth of these systems each day since January of last year.
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