Although solar still accounts for less than one percent of domestic energy production, it’s far and away our fastest growing energy sector. An astounding one third of all new electric capacity now comes from solar energy. At the forefront of this energy revolution is residential solar, which is expanding at a rate of more than 50% a year. Nearly one million homes are equipped with solar installations; within a decade 10 million homes will be generating electricity from the sun.

The explosive growth of residential solar can be attributed to three factors: a rapid decline in cost, generous government subsidies and solar leasing.

Solar installations cost just a fraction of what they did a few years ago, yet many important government incentives remain in place. Last month Congress extended the 30% solar tax credit for another year, and in New York, homeowners are eligible for up to $5,000 in state tax credits. On top of that, the New York State Energy Research and Development Authority (NYSERDA) offers cash incentives determined by the size of the installation. In the end, the majority of state residents who go solar end up paying less than half the cost of the system that they purchase.

Falling prices and generous tax breaks have also spawned a highly competitive solar leasing market. Dozens of companies will install rooftop solar on private homes then lease the systems back to the homeowner. Solar leasing didn’t even exist 10 years ago; today it accounts for two thirds of the residential market.

The appeal of solar leasing is obvious—for little or no money down homeowners can lower their monthly bills by signing a long-term contract with the installer. Easy, affordable leasing is widely credited with popularizing home solar by making it available to the middle class. But as the solar market matures, other financing options and energy distribution systems have emerged, and solar leasing may no longer be the best option for homeowners.

First, there’s the money—banks and credit unions now offer solar loans that allow homeowners to pocket more of the savings that can be achieved through solar. A 2014 comparison by CleanTechnica found that an Albany resident who leased an $18,000 photovoltaic system would save $5,800 over 20 years. Financing the same system with a loan would save $16,000—and if the system were purchased up front, the homeowner would save a whopping $42,000

Solar leases can also make it more difficult to sell a home. While a solar installation that’s owned outright can add tens of thousands of dollars to the value to a home, leased installation may actually reduce the price that buyers are willing to pay. Some prospective buyers are leery of taking over a lease that they may not want or understand—and leasing companies can block a sale if a buyer is deemed not credit-worthy.

Finally, solar leases that typically last 20 years may prevent homeowners from participating in other, more attractive energy options that are becoming available to consumers. For example, New York State is now encouraging community-owned solar projects that let ratepayers participate in an affordable green energy program that is available to renters and homeowners alike. And unlike a house, which may be poorly situated, shared solar installations can be optimally sited to generate the maximum amount of electricity and the greatest return on investment.

Sullivan Alliance for Sustainable Development will present a seminar on solar leasing on Saturday, May 21 at Cornell Cooperative Extension offices in Ferndale, NY (see page 9).

[Bruce Ferguson serves on the board of Catskill Citizens for Safe Energy and the Sullivan Alliance for Sustainable Development.]