Pelchar also passed another of the hurdles to leasing a solar system — credit check.
The economics of Pelchar's decision to invest up front in the system, rather than choosing to pay nothing up front, were well thought out.
"I'm only five months into it but it seems to me, investment-wise, to be the most secure investment you can make," he said. With electricity rates an uncertain thing at best, the solar array locks in a set price for Pelchar.
"I'm pretty much guaranteed that I will generate enough in eight or nine years to pay back my investment," he said. So the next 11 years would all be profit.
A Homegrown Model
About the time that SolarCity had its bright idea to lease solar systems out on the West Coast, the state of Connecticut started a solar lease program of its own that took a different tack.
The state's program was run by then-Connecticut Clean Energy Fund — now known as the Clean Energy Finance and Investment Authority, or CEFIA — and it signed more than 1,000 solar leases in the time it took the state to hit its funding cap. And on that success, CEFIA is in the middle of launching another $60 million round of leases.
Much of how the state's program mirrored how SolarCity ran: down-payment options, monthly lease payments, many options at the end of the lease or when a homeowner moves. But the state didn't want to get into the business of designing and installing solar systems. There were plenty of companies already doing that.
Instead, the state trained about 20 existing solar installers to offer their leasing product.
The state's program was noted in a 2009 report from the National Renewable Energy Laboratory in Golden, Colo., that, after running the numbers, found that the Connecticut lease option offered the "most attractive" price of energy when compared to paying for a system with cash or through a home equity loan.
In the next few weeks the state is launching a second round of solar leases. Bert Hunter, the chief investment officer at the clean energy authority, said that the next round should result in 1,600 residential leases — and one big thing that the commercial players haven't touched on yet.
"It will also have a solar hot water lease," he said. Solar hot water systems are big in Europe, the Carribean and Hawaii, where fossil fuels are particularly expensive. "It's going to offer very price advantage for homewoners who heat with fossil fuels."
So far, he has raised $50 million from private investors for the program, to which an additional $10 million from CEFIA will be added.
"What we're doing is providing a financial option for the homeowners so they can have a wide array of options at the installer level," Hunter said.
Leasing Solar Power
What: Leased solar-power systems
Companies: SolarCity (solarcity.com, 888-765-2489), Sungevity (sungevity.com, 866-SUN-4ALL)
State-run leasing program: Clean Energy Finance and Investment Authority (www.ctcleanenergy.com, 860-563-0015)
Number of households in Connecticut with leased systems: About 1,350
Cost: With no money down, about $65 a month depending on the size of the system.
Lease Term: Usually 20 years