Like many people concerned about the environment, Kirk Thomas had thought about cutting his use of fossil fuels by generating electricity with rooftop solar panels.
But the Bel Air salesman says he didn't have thousands of dollars sitting around to pay for the hardware and installation. And even if he took out a loan, he knew it would be years before the savings from making his own power — reflected in a substantially lower BGE bill — would cover the cost.
Next month, however, the Thomas household expects to install a solar array for no money down. They're leasing it. And even including the monthly rental payments, Thomas expects to see immediate savings on his power costs.
Government subsidies, falling equipment prices, super-low interest rates and now financing from companies such as Google are fulfilling an environmentalist dream that's almost as old as Earth Day: solar electricity that's more or less as cheap as the old-fashioned kind.
A couple of weeks ago, Google said it would team up with SolarCity, the California-based company installing Thomas' unit, to provide $280 million in financing for rooftop solar arrays. SolarCity and competitors such as Sungevity are also tapping traditional financiers such as banks to back the deals.
"It seems very positive, and the demand is actually accelerating," says Pierre Bull, an energy policy analyst at the Natural Resources Defense Council in New York. Solar leasing "had been going on in California for a few years." Now, he said, "it has reached more East Coast states, in particular."
In January SolarCity bought the solar-array installation division of Rockville-based Clean Currents, which also supplies renewable electricity to companies and residences. SolarCity has signed about 100 lease deals with families such as the Thomases and aims to boost its Maryland workforce from 25 to 40 by the end of the year, said Lee Keshishian, director of its Mid-Atlantic operations.
Turning the sun's rays into electricity using silicon wafers has been possible for decades. But for a long time the systems were economically inefficient. It took many more dollars to produce a kilowatt of solar electricity over a certain period of time than a kilowatt of coal-fired electricity.
Then there was the upfront cost. Generation companies can pay for their coal as they burn it. But with solar, you're basically buying three decades' worth of electricity — that's how long the units last — in advance. Who could afford that?
Gradually, though, costs fell and silicon became more productive. Since 2008, costs for photovoltaic panels have been falling by 15 percent to 20 percent a year, Bull said. Not long ago, a rooftop array for a typical house cost $30,000. Now it's settling toward $10,000.
Grants from the Maryland Energy Administration, which NRDC's Bull said have been critical to building the state's solar-power capabilities, cut the expense even more. (The grants average about $3,000 per household, according to administration spokesman Ian Hines.) So do federal tax credits of 30 percent on equipment and installation.
And now there are solar financing companies. It's like leasing a car. You must have a good credit rating. You get possession of the hardware but the leasing company owns it. You decide how big a down payment to make.
You make monthly payments. Thomas' is $117, but as with most solar leases, that will rise by between 3 percent and 4 percent per year over the 20-year term of the deal. SolarCity says that's probably less than how much average electricity prices will rise over the same period. Thomas thinks the company is right.
The bigger the down payment, the lower the monthly rental cost. Thomas is putting zero down. Even so, he expects to save as much as $50 a month initially once he factors in the lease payments and his lower bill from Baltimore Gas & Electric.
The electricity generated on the Thomases' roof will help power their air conditioner and other appliances, reducing what they have to buy from the utility. The Thomases use a relatively high amount of electricity, thanks to their four kids. Thomas was attracted by the idea of solar power because it's clean, renewable and doesn't contribute to global warming.
But "the upfront cost was so much," he said. "It's such a large investment, and the recoup period is a long period of time."
Most people don't need systems as big as the Thomases'. A lease for a typical family putting zero down is about $50 a month, SolarCity says. The typical net savings per month is anywhere from zero to $20, depending on factors such as the house's orientation to the sun or whether it uses electric heat.
Solar leasing isn't for everybody. For people who can come up with the money to buy a system, the savings are likely to be much greater than for families such as the Thomases.
Cash buyers don't have to pay finance costs. They don't have a 3 to 4 percent annual escalator clause on a monthly payment. Cash buyers can take advantage of the state grants and federal tax credits. (The leasing company usually keeps those incentives.)
But for the lease-minded, replacing BGE's dirty, coal-generated kilowatts with clean sun power for no money down and no substantial difference in monthly costs is a deal for them, the economy and the planet.