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Over the past several years, third-party-ownership (TPO) structures for residential photovoltaic (PV) systems have become the predominant ownership model in the US residential market. Under a TPO contract, the PV system host typically makes payments to the third-party owner of the system. Anecdotal evidence suggests that the total TPO contract payments made by the customer can differ significantly from payments in which the system host directly purchases the system. Furthermore, payments can vary depending on TPO contract structure. To date, a paucity of data on TPO contracts has precluded studies evaluating trends in TPO contract cost. This study relies on a sample of 1113 contracts for residential PV systems installed in 2010-2012 under the California Solar Initiative to evaluate how the timing of payments under a TPO contract impacts the ultimate cost of the system to the customer. Furthermore, we evaluate how the total cost of TPO systems to customers has changed through time, and the degree to which contract costs have tracked trends in the installed costs of a PV system. We find that the structure of the contract and the timing of the payments have financial implications for the customer: (1) power-purchase contracts, on average, cost more than leases, (2) no-money-down contracts are more costly than prepaid contracts, assuming a customer's discount rate is lower than 17% and (3) contracts that include escalator clauses cost more, for both power-purchase agreements and leases, at most plausible discount rates. In addition, all contract costs exhibit a wide range, and do not parallel trends in installed costs over time.

We provide evidence that disclosed items are not processed differently from recognized items when the disclosures are salient, not based on management estimates, and amenable to simple techniques for imputing as-if recognized amounts. For a sample of firms with both capital and operating leases, we find that as-if recognized amounts for leases are generally reliable and that both recognized lease obligations and disclosed lease obligations are associated with proxies for costs of debt and equity. The magnitudes of these associations are not statistically different across accounting treatments, suggesting that market participants impound as-if recognized operating lease obligations and recognized capital lease obligations similarly into costs of capital. Conditioning on the reliability of as-if recognized operating lease obligations, we find a difference in the association between recognized versus as-if recognized lease obligations and proxies for the costs of debt and equity when the operating lease disclosures are less reliable.

Diversified application scenarios and business models are effective ways to improve the utilization and economic benefits of energy storage systems. In response to the current problems of single application scenarios, high idle rates, and imperfect price formation mechanisms faced by energy storage on the power generation side, a robust two-stage optimization operation strategy for shared energy storage is proposed, taking into account leasing demand and multiple uncertainties, from the perspective of the sharing concept. A multi-scenario application framework for shared energy storage is established to provide leasing services for wind farm clusters, as well as auxiliary services for participating in the electric energy markets and frequency regulation markets, and the participation sequence is streamlined. Based on the operating and opportunity costs of shared energy storage, a pricing mechanism for leasing services is designed to explore the driving forces of wind farm clusters participating in leasing services from the perspective of cost assessment. Considering the uncertainty of wind power output and market electric prices, as well as the market operational characteristics, an optimized operation model for shared energy storage in the day-ahead and real-time stages is constructed. In the day-ahead stage, a Stackelberg game model is introduced to depict the energy sharing between wind farm clusters and shared energy storage, forming leasing prices, leasing capacities, and energy storage pre-scheduling plans at different time periods. In the real-time stage, the real-time prediction results of wind power output and electric prices are integrated with scheduling decisions, and an improved robust optimization model is used to dynamically regulate the pre-scheduling plan for leasing capacity and shared energy storage. Based on actual data from the electricity market in Guangdong Province, effectiveness verification is conducted, and the results showed that diversified application scenarios improve the utilization rate of shared energy storage in the power generation side by 52.87%, increasing economic benefits by CNY 188,700. The proposed optimized operation strategy has high engineering application value.

This paper studies the financing role of leasing and secured lending. We argue that the benefit of leasing is that repossession of a leased asset is easier than foreclosure on the collateral of a secured loan, which implies that leasing has higher debt capacity than secured lending. However, leasing involves agency costs due to the separation of ownership and control. More financially constrained firms value the additional debt capacity more and hence lease more of their capital than less constrained firms. We provide empirical evidence consistent with this prediction. Our theory is consistent with the explanation of leasing by practitioners, namely that leasing \"preserves capital,\" which the academic literature considers a fallacy.

Streamflow augmentation can support endangered fish during low‐flow periods. Irrigated agriculture being the largest out‐of‐stream consumptive use, there is potential to augment streamflow by temporarily leasing from agriculture. This potential has not been fully realized, perhaps due to a focus on leasing at the extensive margin where land is either irrigated or not. Leasing at the intensive‐margin—applying less water on the full land extent—has received limited attention but could be promising, especially related to short‐term pulse flows for fish. We address this with two questions: Can a concurrent short‐term pause of irrigation withdrawals meaningfully increase streamflow for fish during critical periods? What is the associated foregone crop production and revenue loss? We used the CropSyst model to simulate irrigation demands, yield impacts from a 15‐day pause, and resulting revenue reductions for three focal watersheds in eastern Washington State of the United States, and generated water supply curves that provide the marginal cost of augmentation. We evaluated the strategy's ability to bring flows to levels beneficial for fish for at least two consecutive days. Results indicate that a short‐term irrigation pause can provide meaningful levels of pulse‐flows if conducive conditions related to upstream crop mix, acreage, and augmentation needs are met. The mean cost from lost revenue across years from reduced yields ranged from $1 to $125/acre in scenarios where the targeted streamflow was achieved. This water leasing strategy has potential in some locations to represent a win‐win situation for agricultural and environmental stakeholders and warrants further exploration.

Based on the proposition that leasing is environmentally superior to selling, some firms have adopted a leasing strategy and others promote their existing leasing programs as environmentally superior to \"green\" their image. The argument is that because a leasing firm retains ownership of the off-lease units, it has an incentive to remarket them or invest in designing a more durable product, resulting in a lower volume of new production and disposal. However, leasing might be environmentally inferior because of the direct control the firm has over the off-lease products, which may prompt the firm to remove them from the market to avoid cannibalizing the demand for new products. Motivated by these issues, we adopt a life-cycle environmental impact perspective and analytically investigate if leasing can be both more profitable and have a lower total environmental impact. We find that leasing can be environmentally worse despite remarketing all off-lease products and greener than selling despite the mid-life removal of off-lease products. Our analysis also provides insights for environmental groups and entities that use different approaches to improve the environmental performance of business practices. We show that imposing disposal fees or encouraging remanufacturing, under some conditions, can actually lead to higher environmental impact. We also identify when educating consumers to be more environmentally conscious can improve the relative environmental performance of leasing. This paper was accepted by J. Miguel Villas-Boas, marketing.

By treating leasing and financing contracts as differentiated products with their own unique acquisition costs, the authors develop a structural model of a consumer's choice of automobile and the related decision of whether to lease or buy it. They estimate the model on a data set of new car purchases from the entry-luxury segment of the U.S. automobile market. A key finding is that consumers are myopic and prefer contracts with lower payment streams even when they have higher total costs. The authors also find that consumers are more likely to lease than to finance cars with higher maintenance costs because this provides them with the option to return the car before maintenance costs become too high. The authors demonstrate how automobile manufacturers can use the model to evaluate the effectiveness of promotional incentives, such as cash rebates, interest rate subsidies, and increased residual values.

We examine how the implementation of the K-IFRS No.1116 Lease affects firm value. This new accounting standard mandates capitalization of all leases, resulting in changes in the key accounting leverage ratios and rates of return. The contracting costs hypothesis suggests that changes in accounting techniques have economic consequences because lending contracts are expressed in terms of accounting numbers. We find that capitalizing operating leases, which were off-balance-sheet transactions prior to K-1116 implementation, increases the lease liabilities-to-assets ratio and lease liabilities-to-debt ratio significantly. While a firm’s business fundamentals do not change with the K-1116, we show that the value of firms that use high levels of operating leases decreased with the implementation of K-1116. The declines in firm value are significant for the subgroups of firms that are likely to raise external financing, suggesting that the implementation of K-1116 increased the level of financing frictions and decreased the value of future investment opportunities.

A double-layer robust optimization method for capacity configuration of shared energy storage considering cluster leasing of wind farms in a market environment is proposed based on the autonomy and profitability of shared energy storage. The feasibility of the leasing model of shared energy storage in the current market environment in China is discussed, and a commercial operation model for shared energy storage to provide leasing services and participate in spot market transactions is proposed. A robust optimization model of a master-–slave game for the capacity configuration of shared energy storage is constructed, considering output uncertainties of wind-driven generators and spot prices at multiple time scales. The upper layer of the model aims to minimize the annual cost of shared energy storage and determines the leasing prices and capacity-planning schemes for each period of shared energy storage in the scenario of an interactive game of wind farm clusters. The lower level of the model aims to minimize the assessment cost of the wind farm cluster and updates the leasing capacity for each time period by utilizing the leasing prices and the leasing demand of the wind turbine output power in the worst scenario. By comparing and analyzing multiple scenarios, the master–slave-game-formed lease improves the shared-storage lease benefit by $1.46 million compared to the fixed tariff, and the multi-timescale uncertainty promotes the shared-storage cost-effectiveness to be reduced by 8.7%, while the configuration result is more robust, providing new ideas for optimizing the capacity configuration of shared energy storage in multiple application scenarios.

Northwest Arkansas' commercial real estate market continues to outperform national trends, with office vacancy falling to 4.4% in Q1, the lowest level in 15 years, and well below the U.S. average of 13.9%. Best practices start with close coordination among legal counsel, property management and leasing brokers to draft a letter of intent that sets the foundation for a comprehensive lease, one that mitigates landlord expenses and maximizes cost recovery. Owners who take a disciplined, proactive approach to lease management will be better positioned to protect asset value and meet the expectations of this maturing market.