When it comes to solar panels, there are two main ways to go: buy them or lease them. Both have benefits and drawbacks, so how do you know which is the right choice for you?
Here we’ll break down the pros and cons of each option so you can decide what’s best for your home or business.
Should I Buy Solar Panels Or Lease them?
The main difference between buying and hiring solar panels is who owns the solar panels.
When you buy solar panels, you make a long-term investment and get all the financial benefits of owning your solar panel system.
You also have more decision-making power regarding your system, such as maintenance and monitoring.
Hiring solar panels require no upfront investment and are often seen as a more straightforward way to go solar.
Instead of buying your solar panels outright, you make monthly payments to a solar leasing company.
The leased panels stay on your roof, and at the end of the lease term, you have the option to buy the system, purchase a new lease, or have the panels removed.
While hiring solar panels can be a good option for some homeowners, there are some drawbacks.
First, you don’t have as much control over your system since the leasing company owns it.
Second, you may pay more over time since most leases include a price escalator.
And third, if you decide to sell your home, you may have to transfer the lease to the new owner or buy out the remainder of the lease.
So, should you buy or lease solar panels? The answer depends on your situation.
If you want to maximize your financial benefits and have more control over your system, buying solar panels is the better option.
But leasing may be the way if you want a more straightforward way to go solar with no upfront costs.
To help you decide, let’s take a closer look at the pros and cons of each option.
Pros Of Buying Solar Panels
- You own your system and get all the financial benefits that come with ownership, such as the federal solar tax credit (FSTC) and state incentives.
- You make a long-term investment that will eventually pay for itself through lower electricity bills.
- You have more control over your system, including maintenance and monitoring.
Cons Of Buying Solar Panels
- Buying solar panels requires an investment and more decision-making than leasing.
- If something goes wrong with your system, you may have to pay for maintenance and repairs.
Pros Of Leasing Solar Panels
- You don’t have to pay any upfront costs to install solar panels on your roof.
- The lease term is often shorter than the warranty on the solar panels, so you don’t have to worry about maintenance or repairs.
- You can usually transfer the lease to the new owner if you sell your home.
Cons Of Leasing Solar Panels
- You don’t own the PV system, so you don’t get all the financial benefits of ownership.
- You may pay more over time since most leases include a price escalator.
- You have less control over your system since the leasing company owns it.
So, what’s the best option for you? If you want to maximize your financial benefits and have more control over your system, buying solar panels is the better option.
But leasing may be the way if you want a more straightforward way to go solar with no upfront costs. Ultimately, the decision comes down to your situation and needs.
FAQs
Do leased solar panels increase home value?
You may have heard that solar panels can increase the value of your home. And while this is true, there is some debate as to whether or not leased solar panels have the same effect.
When you lease solar panels, you are essentially renting them from a solar company. The solar company owns the panels and is responsible for their maintenance and repair.
Leasing solar panels can be an excellent option for homeowners who want to go solar without the upfront costs.
While leased solar panels do increase the value of your home, they may not increase it as much as if you owned the panels outright.
Potential buyers must factor in the monthly lease payment when considering your home’s value.
What happens at the end of a solar lease?
At the end of a solar lease, the homeowner can decide to buy the solar panel system. As a residential PV system owner, you may be eligible for additional rebates and tax incentives.
Are leased solar panels tax deductible?
The answer is no; leased solar panels are not tax deductible. Instead, the leasing company gets rebates, incentives, and federal tax credits for purchasing solar panels.
If you lease instead of buy, you are adding layers of expense and giving away the federal tax credit, state incentives, and utility company rebates that you might otherwise benefit from.
How can I break my solar lease?
There are a few ways you can break your solar lease.
If you’re selling your home and need to get out of your PV lease, you can usually assign it to the new owner.
Other than that, many solar leasing contracts explicitly state buyout options and pricing (for instance, you can buy out your lease after ten years for $1,000).
Let’s pretend that your buyout dates aren’t spelled in stone in the contract.
If this is the case, many companies that lease out solar panels also allow you to buy the panels at the market price if you decide you no longer want to be a lessee.
How long your system has been up and running will affect this value.
Solar leases are terminable for relocation purposes. However, you should know that your solar panels might not be portable.
In some cases, you may be able to negotiate with your landlord or property management firm to have the system removed and reinstalled in your new home.
You should contact your leasing firm immediately if you have any inquiries regarding your particular PV contract.
They should be able to explain your alternatives for terminating the lease and the steps you would need to take to do so.
Can leased solar panels be removed?
Contact your leasing provider if you decide you wish to have your rented PV system removed.
It is customary to have a professional remove and return the panels to the rental company.
This service may come with an associated cost. You should also review your lease agreement to determine whether there are any early termination fees.
Let’s pretend that your buyout dates aren’t spelled in stone in the contract. If this is the case, you may be able to get out of your solar lease early by acquiring the PV system from your leasing company at a price that reflects current market conditions.
The answer to this question shifts based on your system’s age and the market’s current state.
You should know that as solar technology advances and prices drop, the value of your PV system may decrease and be worth less than you first paid for it.
What is the difference between a solar lease and PPA?
A solar lease and a PPA are ways to finance a PV system with little to no money. With a solar lease, you make fixed monthly payments for the duration of your contract.
A solar PPA works like your utility bill, where you pay for each kilowatt hour (kWh) of solar energy you use.
Solar PPAs tend to be cheaper than solar leases overall, but your monthly payments with a PPA can fluctuate depending on how much energy your solar panels produce.
Other financing options for solar, such as taking out a loan, typically result in lower costs over the long term than both solar leases and PPAs.
With a loan, you own the PV system and can claim the federal solar tax credit, which is set to step down in 2022 and expire in 2024.
You don’t own the system with a solar lease or PPA, so you can’t claim the credit.
How do leased solar panels work?
When you lease a solar panel, you are renting it from a solar company. The solar company owns the panels and is responsible for their maintenance and repair.
You will pay a fixed monthly amount for solar panels’ electricity. This makes solar more affordable for many.
Leasing also gives customers the benefits of a professionally installed solar system and the latest technology.
Solar installers will often include free maintenance and monitoring in the lease agreement.
This can give customers peace of mind, knowing that their system is monitored and repaired by a professional if necessary.
Leasing also offers some tax benefits. For example, the solar company may be eligible for state and federal tax credits, which can offset the lease cost.
Leasing is a good option for those who want to go solar but don’t have the upfront cash to buy a system outright.
It can also be a good option for those who want to save money on their monthly electric bills but don’t want the hassle of maintaining a solar system.
Solar leases typically last 20-25 years. At the end of the lease, you will have the option to buy the system, renew the lease, or have the system removed.
There are two main types of solar leases: pre-paid and post-paid. With a pre-paid lease, you pay for solar panels’ electricity.
This can save you money on your monthly electric bill, but it also means that you are locked into the rate for the length of the lease.
With a post-paid lease, you pay for the solar panels’ monthly electricity.
This can be more flexible, but it also means that your monthly electric bill will fluctuate based on the amount of electricity your solar panels generate.
The type of lease that you choose will depend on your needs and budget.
But no matter what type of lease you choose, leasing is a great way to save money on your monthly electric bills and go solar without paying for the system upfront.
Solar leases are a great way to save money on your monthly electric bill and go solar without paying for the system upfront. Instead, you rent the panels from a solar company with a solar lease.
The company owns the panels and is responsible for their maintenance and repair. You will pay a fixed monthly amount for solar panels’ electricity.
Leasing also gives customers the benefits of a professionally installed solar system and the latest technology. Solar installers will often include free maintenance and monitoring in the lease agreement.
This can give customers peace of mind, knowing that their system is monitored and repaired by a professional if necessary.
How do you get out of solar lease Sunrun?
You should know a few things if you want to cancel your Sunrun solar lease. You should check into the system’s reliability first.
Next, inquire as to whether or not the warranty covers the cost of replacement labor. Finally, you should do some math to determine if buying out the lease will be worthwhile.
Buying out the remaining ten years of a lease when the underlying technology is already 10 to 15 years old isn’t always the most excellent option.
The most important thing to do is to calculate the total cost of the remaining lease payments and compare them to the premium you would pay to buy out the contract early.
You should also consider the maintenance cost if you decide to take over the care of the system yourself.
Even if you’re frustrated by some aspects of leasing a solar energy system, you may ultimately decide that the upkeep cost is too high to justify taking it on yourself.
Can you write off a solar lease?
You can’t write off a solar lease because it’s not considered an eligible renewable energy tax credit by the IRS.
However, you may be able to take advantage of other solar incentives offered by your state or utility company. Be sure to check with your local government to see what’s available.
Utility companies offer a variety of rebates and incentives for customers who install solar panels. Sometimes, these incentives can offset the installation cost or make going solar more affordable.
Solar leases typically last 20 years, and at the end of the lease, you have the option to buy the system outright or renew the lease. However, because you don’t own the system, you won’t be able to take advantage of the FSTC.
If you’re interested in long-term savings, buying your solar panels outright is the better option. This is because you pay more over time when you lease a solar panel.
With ownership, you get the full benefit of the FSTC and may be eligible for other state and local incentives.
The bottom line is that going solar is a wise financial decision, regardless of whether you lease or buy your photovoltaic system.
With either option, you’ll see immediate savings on your energy bill and save even more money over the long term. So, the best option for you comes down to ownership.
How much is a solar lease per month?
Solar leases typically range from $50 to $250 per month, depending on the size of the system and the company you lease from.
The average cost of a solar panel installation is $18,000, so leasing can be a great way to get started with solar without a significant upfront investment.
If you’re considering hiring solar panels, compare multiple installers to get the best deal.
Should I buy a house with leased solar panels?
If you’re considering buying a house with leased solar panels, you should know a few things first.
For starters, it’s essential to understand that when you buy a house with leased solar panels, you’re not buying the panels themselves. Instead, you simply agree to rent them from the company that owns them.
If the panels need to be replaced or repaired, you’ll likely have to pay for those costs yourself. Additionally, if you decide to sell the house before the lease is up, you’ll need to find someone willing to take over the lease agreement.
Another thing to remember is that leased solar panels typically don’t generate as much savings as owning them outright. This is because you’re still paying for their electricity costs, just at a lower rate.
So, if you’re considering buying a house with leased solar panels, research and weigh all your options before deciding.
Conclusion
Leasing solar panels is a great way to get started with solar without making a significant upfront investment, but there are some things you should know before signing up.
If you’re interested in long-term savings, buying your solar panels outright is the better option.
Solar leases typically last 20 years, and at the end of the lease, you have the option to buy the system outright or renew the lease.
However, because you don’t own the solar power system, you won’t be able to take advantage of the FSTC. Utility companies offer a variety of rebates and incentives for customers who install solar panels.
Sometimes, these incentives can offset the installation cost or make going solar more affordable.
The bottom line is that going solar is a wise financial decision, regardless of whether you lease or buy your PV system.
With either option, you’ll see immediate savings on your energy bill and save even more money over the long term.