In a solar lease, a homeowner and a solar firm reach a deal whereby the homeowner rents a solar panel system from the company for a predetermined timeframe, usually 20 to 25 years. The homeowner pays the solar provider a monthly lease payment for the usage of the solar panels during this time.
Under a solar lease, the solar firm is in charge of the solar panel system’s ownership, maintenance, and repair costs. As a result of the solar panels producing energy and partially balancing the homeowner’s electricity use, the homeowner gets decreased electricity bills in exchange.
The homeowner may have the choice to continue the lease, buy the solar panel system at a huge discount, or ask that the firm remove the panels at the end of the lease period. For homeowners who wish to use solar power without incurring the up-front costs of buying a solar panel system outright, solar leases can be a good option.
There are several benefits to selecting ownership, whether of whether you buy your solar panels up front or loan your system over several years:
Higher Long-Term Savings
The fact that buying your solar panels entirely ensures large long-term savings is a key factor in choosing to buy energy from the sun over leasing. Your solar panel system will typically provide power for over 25 years, which will help you use less energy and pay less for electricity. If you pay cash, the solar panel system is all yours right away; there are no ongoing monthly payments to make in the future. Even though though monthly payments are needed if you finance, you should continue to save money each month since, after the loan is paid off, all additional savings are yours to keep.
You will typically reach a point in 7 to 10 years where the amount of money you have saved matches the amount you paid for the panels, whether you buy the panels outright or borrow money to do so. The payback time for solar energy is this. Once this time period is over, you should to start saving more cash than ever on your monthly energy bills.
A solar panel system that you own wholly is completely yours. This makes it simpler to sell your house, often for more money than you would have gotten without solar panels. For this reason, many homeowners choose to buy instead of lease a solar system.
If you enter into a solar lease or PPA, you can still sell your house, but it may be more difficult due to the terms of your contract with the solar company. As the solar installer technically owns the panels on your house, they are obligated to take part in any discussions on the ownership transfer.
Tax Credits and Incentives
You can benefit from federal and state tax credits when buying a solar panel system, which can significantly reduce the cost of solar panel installation. Also, you might profit from local incentives like net metering schemes further to reduce your power costs.
Because they own the panels, the solar installer gets the Federal Solar Tax Credit and any applicable federal and state incentives if you lease. Since the solar firm owns the panels, they are the ones that profit the most from net metering, not you. You must get their approval before registering.
All monitoring and upkeep required after buying a solar panel system are your own. To make sure your system runs well, you must monitor it, and if there is an issue, you must pay to have it corrected. To help with that process and save costs for any necessary solar maintenance, several companies, like Palmetto, offer real-time system monitoring and maintenance plans.
Higher Upfront Investment
You need the money in your bank account to buy a solar panel system since even with the federal solar tax credit, the costs could remain high. You can still get a solar loan if you don’t have the full amount to pay with cash.
More Insurance Coverage Needed
You might need to expand your property coverage in order to secure your solar energy system. If you’re prepared, it may imply higher rates, that would raise your budget.
The majority opinion is to avoid leasing a solar energy system. Multiple causes.
The federal government is offering a 30% solar investment tax credit (ITC) through the end of 2019; but, those who lease cannot profit from the rebates, incentives, or ITC. The ITC for residential solar users will drop to 26% in 2020, 22% in 2021, and then vanish. At that point, commercial credit will forever decrease to 10%.
Also, even if you can dramatically reduce your electric bill, you will still need to make a monthly payment for the term of the leasing agreement. Buyers of domestic solar power systems not only claim control of their solar arrays for the duration of the system, but also often recoup their upfront outlay.
Indeed, solar leases are effective for thousands of customers around the nation. Yet just like in the case previously mentioned, minute details, like rising interest, can undermine any attempts to save money on power. Yet in the case of a dispute, solar contracts may have a rigid “you cannot sue us” clause that compels you to resolve any disagreements through an arbitrator, usually one chosen by the firm.
Should I Lease or Buy My Solar Array?
You’re not alone if you find the idea of leasing solar equipment that is put on land you own weird. This could come as a surprise to find that until lately, solar leasing and Power Purchase Agreements dominated the home solar business. The solar market was created by a chain of events, and now a coincidence is causing a change in which more homes are able to buy solar equipment entirely. 2 major factors stand out. First, equipment prices are steadily declining. Also, much like with a solar lease, there are now consumer-friendly financing solutions that enable solar ownership with no upfront fees.
It becomes clearly obvious why purchasing solar is a no-brainer when you combine those arguments with the fact that solar ownership puts tax benefits and cash rebates back in the customer’s pocket to help in paying off the solar financing quicker and simpler. Even so, there are some circumstances in which signing a lease or PPA makes more sense. Now let’s talk about each advantages and disadvantages.
You must decide for yourself, based on your personal house and budget, whether to buy solar electricity or lease it. It helps to be aware of all of your alternatives before making that choice.
Both a solar lease and a solar PPA bind you to a solar agreement that you must maintain throughout the term of the contract. A solar PPA has you paying a fixed rate per kWh for the power you use, but a solar lease has you paying a fixed amount each month for the duration of the lease. Both times, the solar installer is in charge of monitoring and maintenance while retaining ownership of the system.
Consider buying your solar panels entirely if you want to reap the full benefits of your system, which also include greater control, higher property values, and improved savings. Either you may pay for it entirely up front with a cash purchase or you can finance it with solar loans.
Contact Palmetto right once if you’re contemplating going solar and want to maximise your benefits. Our experienced solar experts can help you go through your alternatives, explain the procedure in full, and handle all the details on your behalf. To find out what system size is best for you, use our Free Solar Design and Estimate tool straight away.
Is purchasing or leasing solar panels advisable? You should think about your budget, time, and ownership when choosing if to lease or buy solar electricity.
Leasing a solar system is a good choice if you lack the money or can’t obtain a solar loan since you incur little to no initial costs.
You normally expect achieving something at the end of each investment you make. The most effective option is to get a solar panel system if your objective is to reap the financial rewards of installing solar energy systems while also improving the property’s market value.
Consider leasing if you have no plans to move and are only interested in the environmental benefits rather than the potential savings.
The solar installer keeps ownership of the system when you lease it. You must buy the solar panel system if you want full control over what happens to it.
Talk with Palmetto’s solar experts if you’re still unsure about your needs and want their assistance in evaluating your options and making the best choice.