Solar panel systems come in many different shapes and sizes. A wide variety of companies provide numerous products, brands, and payment options due to the rapidly increasing demand for solar worldwide. Understanding the options can be tricky for a customer.
Deciding between leasing or purchasing is often the first layer in differentiating an investment in solar panels. The ownership of the panels themselves serves as the main distinction between purchasing and leasing. When a customer purchases panels, they pay an upfront cost with cash or a loan via financing to assume ownership. Leasing panels or signing a purchase-power-agreement (PPA) means the ownership, installation, and maintenance stays with the solar company. Both purchasing and leasing have their own unique advantages and disadvantages depending on the customer.
What are the benefits of purchasing solar panels?
A customer who purchases panels owns an asset that adds to a home’s value, pays for itself in a short time, and provides a sizable return on investment. The savings earned through lower energy bills can pay back the cost of a system in less than five years. With no monthly payments to follow, solar purchasers are then able to enjoy decades of free energy.
Purchasing panels also makes a customer eligible for the federal solar tax credit (ITC) of 26% back on the cost of panels. This tax credit has been active since the 2005 and is a key part of the success of solar. Learn more about this credit here.
What are the benefits of leasing solar panels?
Leasing panels or signing a PPA offers the advantage of no money down and no maintenance. Some leasing companies offer first-year specials to help a leasee get started with solar. Given that the owner of the panels is still the solar company, they handle the maintenance and installation of the panels. In turn, a homeowner loses some control over the decision-making behind where panels are placed or how they look.
Is buying panels worth it? Is leasing?
Purchasing panels has the advantage when it comes to maximizing savings. The savings that solar panels provide typically amounts to the system cost within five years of acquisition. That means that for the remainder of the solar panels’ lifetimes (an additional 20 years covered by warranty), a homeowner will enjoy electricity generated at no cost. Since a homeowner maintains possession of the panels when purchased, they also raise the market value of the home considerably.
Leasing solar panels requires monthly payments to the solar company for as long as the panels are in place. Though the upfront cost is considerably lower than owning panels, leasing offers a much lower return-on-investment.
Is it easier to buy or lease solar panels?
Leasing solar panels may appear more convenient than purchasing panels but can include challenges. If a home with leased panels sells, the old homeowner would need to either buy the panels outright or transfer the lease to the new homeowner (not all are willing to assume the lease). Since leases typically last about 20 years, this often becomes the case. Some leasing companies offer services to relocate the panels, but these can be expensive and are charged to the customer.
Purchasing panels requires more involvement behind the design, maintenance, and financing of the system. Some home or business owners may prefer this as it provides more control over the project.
How does purchasing solar panels work? How does leasing work?
Solar panels are purchased with cash or through a loan. Most solar companies offer different types of solar loans depending on various factors such as credit score and the size of an upfront payment. The financing involved with purchasing panels requires more attention but can maximize a return-on-investment.
Leases and PPAs involve monthly payments directly to a solar company. These leases are typically 20 or 25 years in duration. Leasing a system is often used when a homeowner does not have good credit or is not concerned about home transfer or custom options.
Here’s the good news. Whether you buy or lease panels, you will save money and help the environment. Buying panels provides the best financial benefits without sacrificing ease. Leasing panels provides a viable avenue for customers who do not have good credit or are not concerned about home transfer or custom options.
Curious which option makes the most sense for you? Contact us for a free consultation.