A solar lessor, also known as a solar leasing company or solar power provider, is a business entity that leases or rents out solar energy systems to residential, commercial, or industrial customers. The solar lessor is responsible for the installation, maintenance, and operation of the solar panels and associated equipment on the customer’s property.
Typically, the solar lessor owns the solar energy system and is responsible for financing the upfront costs of equipment purchase and installation. In return, the customer agrees to lease the solar system and pays the solar lessor a fixed monthly fee or a predetermined rate for the electricity generated by the system.
What are the Benefits of Being a Solar Lessor?
Choosing to become a lessor offers several benefits both financially and operationally such as:
- Firstly, leasing solar assets provide a consistent income stream which is especially advantageous for those who own assets that are underutilized.
- Secondly, lessors avoid risks related to fluctuations in asset values, especially in industries where asset values can be volatile, such as real estate and the automotive industry.
- Thirdly, solar lessors may be eligible for tax benefits such as interest deductions and depreciation that are not available to those who sell their assets outright.
- Fourthly, lessors retain the flexibility to adjust lease terms as required, such as rental rates, lease extensions, or termination, depending on market conditions or lessee needs.
- Fifthly, in most cases, lessees are responsible for maintaining the leased asset, which can help reduce maintenance costs for the lessor. Maintenance is always a major cost that people would love to avoid.
- Sixthly, lessors can diversify their portfolios by leasing assets. This way they can improve their credit.
- Lastly, leasing assets to multiple lessees can increase asset utilization and generate higher returns while minimizing idle assets.