Solar Tribune

Should I Lease or Buy Solar Panels?

It’s important to do your homework when considering whether to buy or lease your solar panels. When you lease a solar system or enter into a Power Purchase Agreement (PPA), you do not own the system and are simply “renting” it from the installer.

Let this serve as a useful guide to help you evaluate the best fit for your specific situation.

You should lease/PPA if…

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You should buy if…

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You value immediate savings over maximizing long-term savings. _ You want to maximize savings over the long-run.
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You don’t want to be financially responsible for system maintenance. _ You want greater flexibility if you decide to sell your home in the future.
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You’re looking for a quick, cost-effective way to lower your carbon footprint. You can take full advantage of federal and state incentives and tax credit opportunities.

Savings vs. Convenience

At the end of the day, purchasing solar panels outright will yield a greater return on your investment than leasing, but leasing offers a level of convenience that may appeal to certain users.

Source: SolarCity

Before committing to buying or leasing a solar panel system, you should consider the “pros” and “cons” of each option and use online tools to fully evaluate your options. Solar energy is cheaper now than ever before across much of the world, and the variety of financing options make it an increasingly attractive investment for homeowners seeking to slash energy costs.

Regardless of how you finance your solar panel system, both the budget-conscious and environmentally-conscious can agree that solar energy is always a wise investment.

Trend Towards Customer Ownership

Outright customer ownership of solar panels continues to grow in popularity.

This according to a report released earlier in the year by GTM Research. After peaking in 2014 at 72% of the market, less than 50% of homeowners using solar systems nowadays are renting them from a third party. Meanwhile, the share of customers choosing to own their solar systems outright (via cash purchase or a solar loan) sits at its highest point ever.

Source: GTM Research

This trend towards customer ownership is expected only to continue. As the GTM report put it:

 

“All signs point to the continued rise of customer ownership. Leasing was a necessary temporary solution that sparked the original growth of residential solar, but the future is cash and loans.”

 

Still, the solar panel buy vs. lease debate varies from person to person, and financial considerations are just one piece of the puzzle. Here are some of the primary “pros” and “cons” associated with both options:

 

Buying: Pros & Cons

Pros

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Cons

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Flexible financing options (cash, home equity loan, solar loan) _ High upfront cost if purchasing with cash
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Improves the resale value of the house _ Full payback period typically takes 5-10 years
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Reduce tax burden through federal/state tax credits   Owner responsible for maintenance costs

 

 

Leasing & PPAs: Pros & Cons

Pros

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Cons

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Little/no upfront cost _ Complicates home selling process
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Not responsible for maintenance and service _ Hidden fees can erode energy cost savings
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Reduce tax burden through federal/state tax credits Relinquish some control of your roof

Getting the Best Deal

Comparing offers from multiple contractors is the simplest way to help ensure you get the best deal. Get competing offers from trusted local solar installers near you by using Solar Tribune’s quote comparison tool.

Cover photo source: NBC News