“Akamai Money” seeks out local experts to answer questions about business in Hawaii. If you have an issue you would like us to tackle, please email it to business@staradvertiser.com and put “Akamai Money” in the subject line.

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Question: SolarCity is marketing a 20-year lease option for home photovoltaic systems. Who is most likely to benefit from the lease option?
Answer: Customers who want to limit upfront, out-of-pocket expense, prefer to see immediate savings and want the insurance, repair service and performance guarantee included.

Q: Who gets to claim the state and federal tax credits if the system is leased?
A: The owner of the solar system claims the credits. In a purchase, the homeowner pays the upfront cost of the system and can claim the tax credit on that year’s tax return. In a lease, the solar provider and financing partner cover the upfront cost, which is partially offset by the tax credit, and the homeowner pays a lower payment for the power. The homeowner benefits from the tax credit in either case.

Q: What happens at the end of your 20-year lease? Do you have to negotiate a new lease? Can the homeowner buy the system at that point, and, if so, what would the cost be? Would it be similar to the cost of a new system or less since it is a 20-year-old system?
A: At the end of the term, customers can choose to have the system removed at no cost, they can extend the lease in five-year increments or they can purchase the system at the purchase price set in the lease. To be compliant with tax laws governing leases, this price is set at an amount that is at least 20 percent of the value of the system when the lease is executed.
Q: Is the monthly cost stable for 20 years, or can the leasing company increase the monthly fee at some point?
A: It depends on which lease option the customer chooses. There is an option with no increases for the 20-year lease term. There is also an option with annual lease escalators. In all cases, when the customer signs the contract, they will know the exact rate they will pay at any time throughout the 20-year term.

Q: What if I decide later that I want to purchase the system? Can I do that? Is there a penalty for breaking the lease? How much would it cost to purchase the system from the leasing company? Would I have to pay as much as if I installed a new system, or do I get a discount depending on the age of the system?
A: Customers can purchase the system at the end of the lease term if they include this option when they sign their lease. Consumer leasing law requires that an actual purchase price be included. To be compliant with tax laws governing leases, the purchase price is set at an amount that is at least 20 percent of the value of the system when the lease is executed.

Q: Last week Gov. Neil Abercrombie signed a law allowing homeowners to borrow money to buy a solar system and make their loan payments as part of their electric bill. What are the advantages of leasing over on-bill financing?
A: Both are attempts to make solar power available to more people. On-bill financing (OBF) may create opportunities for renters who are interested in cutting electricity costs with solar PV. We are part of the Public Utility Commission’s OBF working group, and our work is not yet complete, so it is difficult to compare.