Solar panel systems are long term investments with a lifespan of more than 20 years. Switching to solar energy has long term benefits which include enjoying lower utility rates. In addition, using solar energy reduces your carbon footprint, therefore, it is eco-friendly. To start using clean solar energy there are two main financing options; buying or leasing the solar panels from a solar company. Whether to lease or buy solar panels will depend on a number of factors including your budget. In this regard, we discuss the two financing options, leasing vs buying solar panels. We hope the discussions will make it easier for you to choose between the two options.
How Does Solar Lease Programs Work?
Solar leases have become common with many homeowners and commercial enterprises. But what does leasing a solar system involve? For solar leases, you get into a contractual agreement and sign a solar lease agreement. You will rent the system for an agreed period of time from a third-party party which is usually a solar company that purchases and maintains the solar system. The possessor becomes the lessee while the solar leasing company becomes the lessor. You pay the solar company the agreed rate for the solar energy generated by the solar system.
Solar lease periods can range between 10 years and 25 years. At the end of the lease, the solar leasing company can either sell the solar panel system to you at a fair market rate value or remove them from your property. There two types of solar leases, either you can prepay the lease amount and have no monthly bills. Else, you can pay agreed monthly payments for the lease period. There are various pros and cons of leasing over buying solar panels.
Pros of a Solar Panel Lease
The primary advantage of leasing solar panels is that you won’t be required to pay any upfront solar costs. Therefore, you do not have to figure out how to raise the solar installations costs. However, some companies have zero down payment for both leases and solar loans. Therefore, this may not be a major determining factor. The other benefit is that the solar leasing company will be responsible for the solar panel system maintenance during the entire lease period.
For solar leases, the leasing company takes care of all the installation processes. Your role comes in when you need to understand the lease term; lease period and the solar panel lease cost. As such, it is essential that you evaluate the lease term and how much you will be paying per month. The total amount should not exceed your current monthly utility bills. Also, understand the capacity of the solar system and the amount of your energy needs the solar system can produce.
cons of a Solar Lease
Solar tax credits offered by the government have made the costs of installing solar affordable. When you lease a solar panel, the leasing company will benefit from the federal subsidies and state incentives and not you or your organization. That is not all, you will share the benefits of solar savings with the leasing company meaning that you will save less than if you had bought the system. Lastly, you will not enjoy the property value increment associated with solar panel installation..
Buying Solar Panel
Buying a solar system means that you own the system. You will buy the system using your funds or using a solar loan. As soon as the solar company receives the payments the solar system becomes yours. Owning a solar system comes with certain benefits and responsibilities too. Noteworthy, you can use solar loans to finance the solar system. Some loans are secured while others are not.
Pros of Purchasing a Solar System
When you buy a solar system you own the system. Therefore, after completing your loan payments, the solar panel system generates free solar power to you for the entire lifespan of the solar panels. More so, you can benefit from the federal 30% ITC subsidy if you install the system by December 1, 2020, after which the federal subsidy will reduce to 26%. When you own a solar system, you will safeguard your finances against price escalations of utility bills because you save more when you own a solar system.
What’s more, in case you put your property up for sale, it will attract a higher value than non-solar homes or homes with solar leases.
Cons of buying a Solar System Instead of Leasing
Before owning a solar system you have to figure out how to pay the solar panel system costs. You also get involved in solar installation procedures, for example, getting permits. Also, if you are not in a position to pay for the cost of the solar system, then you have to secure a loan through a financial institution. Apart from that, owning a solar system comes with the responsibility of maintaining the system even though generally solar systems have little maintenance costs.
The Bottomline
When evaluating buying vs leasing solar panels ask your solar power company to give you quotations for both solar financial options so that you can compare. Then, compare monthly payments in the two options and the lease and loan period to decide what is best for you.
In conclusion, whether you lease or own a solar system,, you will reduce your carbon footprint by using clean energy. Secondly, you will enjoy monthly savings from your utility bills. So, whichever system you choose, a solar system has tremendous benefits.
