Should I Lease Or Buy Solar Energy
You get to use all of the solar power that your system creates, which cuts down your utility bill with net metering. In exchange for using solar energy, you pay a monthly lease payment to the solar company.
should i lease or buy solar energy
When you purchase solar panels, you pay off the system immediately and then have no more monthly payments. With a solar lease, on the other hand, you are locked into monthly lease payments for 20 years, sometimes more, depending on the lease term.
When you buy solar panels, you own them, so you will be able to take advantage of the federal tax credit, solar renewable energy credits (SRECs), plus other utility and state incentives.
Why is that? Well, although the solar lease can be passed onto a new homeowner, it can be difficult to find a potential home buyer who will want to enter a 20-year solar contract on top of buying a new home.
Plus, the solar company can deny new homeowners from entering the contract based on their credit score. So, finding someone who is willing to take over the lease and someone that the solar lease company agrees to can be difficult and time consuming.
However, if electricity costs don't increase by the predicted amount in a certain year, or it only increases slightly, you might actually spend more on your lease payment than you would have paid on an electricity bill without solar.
The good news is that solar panels are pretty low maintenance. You should still be prepared to have to pay for some repairs and upkeep over the lifetime of the system, such as replacing the inverter.
If you are interested in finding the best solar panels to power your home and help the environment, the sticker shock may give you second thoughts. However, there is another option: Leasing solar panels can allow you to switch to solar energy without the upfront investment.
Leasing solar panels makes the switch to solar energy more attainable for customers who may not have the cash reserves required for the upfront investment in solar panels. However, unlike buying solar panels, or using a payment plan toward the purchase of solar panels, leasing solar panels means you do not own them. Rather, a third party owns the equipment.
On average, leasing solar panels will cost between $50 and $250 per month. This cost is determined by multiple factors, i.e., how much energy you use, the company, your location and your credit score. Plus, some solar companies require a down payment, while others allow you to lease with a $0-down agreement. These costs should be considered when determining if you should lease a solar panel system.
That means you will ultimately end up spending more than the upfront cash rate for the solar panel. The difference between getting a solar loan and using a solar lease is that, with a loan, you own the system. If you are interested in a solar loan, you will need to shop around for the best rates and terms.
With a solar lease, you do not own the system and therefore do not qualify for government or private rebates or incentives for the solar panels. Depending on where you live, the cash-based incentives may be significant enough to make purchasing solar panels a much better option.
Although solar panels in general add value to a home, a home with leased solar panels can complicate a real estate transaction. If the panels cannot be moved, or the lease cannot be transferred to the new owner (either because they are disinterested or the lease originator will not agree), then you may have to pay more to break the contract. Advertisement THIS IS AN ADVERTISEMENT AND NOT EDITORIAL CONTENT. Please note that we do receive compensation for any products you buy or sign up to via this advertisement, and that compensation impacts the ranking and placement of any offers listed herein. We do not present information about every offer available. The information and savings numbers depicted above are for demonstration purposes only, and your results may vary. Compare Quotes From Top-rated Solar Panel Installers
Depending on the terms of the solar lease, you may be able to get solar panels up and running on your home for little to no money down. Although you will continue to make payments throughout the term of the lease, you will also save money through your utility bill.
When you lease solar panels, you get the benefits of reducing your utility bills and helping the environment without dramatically affecting your savings at one time. Depending on the lease program and terms, you may be able to buy the solar panels at the end of the agreement.Best Solar Companies By States And Cities
The steep up-front costs for a residential solar system can make a leasing company's sales pitch sound pretty appealing: Pay little or nothing and save hundreds of dollars per year on average. (The premise is that you save because the combination of your lease payment and your electric bill is less than what you currently pay for power.) Leasing can also look seductively simple compared with buying: There's no need to shop separately for an installer and financing; you just sign on the dotted line. So it's not surprising that 72 percent of the people who installed residential solar systems in 2014 did so through leasing or another type of third-party arrangement. But the reality is not quite so sunny.
Your Savings Will Be ModestPeople who lease their solar systems save far less than those who buy them outright or with a loan (they also miss out on federal tax benefits and any local incentives). Many leases contain an escalator clause that can further reduce savings by increasing payments 3 percent per year. So if you're paying 12 cents per kilowatt-hour in year one, with a 3 percent escalator, you'll be paying 18.2 cents in year 15. That means that if the cost of energy doesn't rise as quickly as the contracted lease payments increase, your savings could evaporate.
That's what happened to Andrew and Nora Barber, who had to buy out the lease on the solar system on their Clovis, Calif., home after two prospective buyers were frightened away by it. "I offered the solar company $16,000, which was the total of all the payments for the remainder of the contract," Andrew says. "But $21,000 was the buyout price in the contract, and the company wouldn't budge."
A solar lease is a financial arrangement where the company that installs your solar panel system retains ownership, and you pay a fixed monthly amount to use the system and receive any electricity it produces.
A solar lease and solar PPA are fundamentally the same product. You enter into a contract with a solar company to have them install a solar energy system on your roof, and you get to use the solar power that the system generates in your home, while they retain ownership.
The decision over whether to purchase or lease solar often comes down to your current financial situation and long-term housing plans. Buying vs leasing solar panels are both ideal options in different situations, so you should thoroughly examine the pros and cons of leasing vs buying solar panels to determine which is right for your needs.
A big reason for buying solar vs leasing is that buying your solar panels outright ensures significant long-term savings. Your solar panel system typically generates electricity for 25+ years, which helps lower your energy usage and reduce your electrical energy bills.
If you pay cash, you pay for the solar panel system immediately, and there are no future recurring monthly payments to make. If you finance, you have monthly payments, but you should still save money each month, and once you pay off the loan, all of the additional savings go right into your pocket.
Whether you buy the panels or get a loan, you will typically reach a point in 7 to 10 years where the amount of money you have saved equals the amount of money you paid for the panels. This is known as the solar payback period. Once you clear this period, you should start to see even greater savings on your monthly energy costs than ever before.
If you choose to lease or sign a PPA, your total savings will likely be more modest, as you will still pay the solar installer every month of your lease period, with no breaks or end date. Additionally, many leases and PPAs contain an escalator clause that can annually increase your monthly payments over the life of the agreement, which is usually 20 years, and sometimes longer.
While you can still sell your home if you sign a solar lease or PPA, your contract with the solar company can make the process more difficult. Since the solar installer technically owns the panels on your home, they have to be involved in any conversations over the transfer of ownership. You have two primary options for negotiating the terms of your deal:
You should discuss the full details of both options with your solar company if you choose a lease or PPA, as the financing of your solar power will play a large part in the process you follow when selling your home.
If you lease, the solar installer gets the Federal Solar Tax Credit and any related state incentives because they own the panels. You have to get approval from the solar company to enroll in net metering, and because they own the panels, they reap most of those benefits, not you.
Both a solar lease and a solar PPA enter you into a solar contract you must abide by for the duration of the agreement. With a solar lease, you pay a fixed amount every month for the entire lease period, and a solar PPA has you paying a fixed rate per kWh for the electricity you use. In both cases, the solar installer retains ownership of the system and is responsible for monitoring and maintenance.
If you wish to enjoy the full benefits of your solar panel system, including increased savings, higher property values, and greater control, you should consider buying your solar panels outright. You can either buy it in full upfront with a cash purchase or finance it through solar loans.
Additionally, buying and installing solar panels increases the value of your home, making it possible to recoup most of your investment should you decide to sell your home down the road. Solar panels also make your home more attractive to potential buyers, which makes it easier to sell your home in a competitive market. New owners get to enjoy the lowered electricity costs of a home with solar panels without the hassle of buying and installing them, making homes with rooftop solar especially attractive to first-time home buyers. 041b061a72