Learn the Pros and Cons of Buying vs. Leasing Solar Panels
Posted by, Price To Compare
At Price to Compare, our goal is to make saving on your energy costs easy. Installing solar panels is a big decision that can help save on your electric bill. If the upfront cost of owning your own solar panels is too much to take on, leasing solar panels may be a great way for you to invest in your home and your future. So, we are going to break down the pros and cons of buying vs. leasing solar panels.
Switching to solar is smart and sustainable. Buying or leasing, the main similarity is the cost savings you as the homeowner get while at the same time creating long-term, renewable, and clean energy independence. This benefit helps you now, as well as future generations.
Regardless of the pros and cons of buying vs. leasing solar panels, if you’ve decided it’s time to install solar panels on your roof, congratulations! Check out these considerations when installing solar panels. We’ll guide you through essential questions like mounting options, differences in solar panel types, whether you need to hire an industry professional for installation, and more.
Pro-Tip: No matter if you lease or buy, be sure to keep your insurance provider up-do-date with your home upgrades.
Buying or Leasing: What’s the difference?
Leasing solar panels helps homeowners circumnavigate the need for a bundle of up front cash, which usually costs between $16,000 and $26,000. A third party maintains ownership over the panels that get installed on your roof. The homeowner then pays a monthly cost to the third party. Depending on the lease contract, homeowners can purchase the solar panels when the agreement expires. Generally, solar loans last around 20 years.
One advantage with leasing is maintenance of the panels. While they are under contract, the third party remains responsible for all maintenance and repairs costs. That being said, solar panels are applauded for having relatively low maintenance needs.
Pro-Tip: One major disadvantage of leasing is that federal and state rebates and incentives designed to assist with solar panel installation go to the third party rather than the homeowner.
If you have the initial capital to purchase solar panels, this can be the best way to save the most money long-term. The average payback time for owning solar is 6-10 years. However, if you don’t have the funds right now and still want to own the panels outright, there are financial assistance options to help you meet your home goals. How long you want to remain in your current home may factor into your choice. Let's shine some light on the situation.
Owning Your Own Solar: Ways To Pay
If you’re not familiar, tax credits are a reduction in the amount of income taxes you owe. Say your solar panels cost $10,000. You can claim 26% of that, $2,600, off of your income taxes, assuming you owe taxes.
A federal solar tax credit was extended by Congress for 2020-2022 at 26% for solar panels installed that year. For 2023, the tax credit lowers to 23%. Many states also provide homeowners with rebates, incentives and assistance toward energy independence.
Read the Office of Energy Efficiency and Renewable Energy’s guide for more information on federal and state tax credit programs. It can make the difference between buying upfront and financing long term.
What if you move?
The pros and cons of buying vs. leasing solar panels become a bit complicated when you’re considering selling your home. Clearly, unlike a stock portfolio or savings account, it's a challenge to pack up your solar panels if you choose to relocate. With leased panels still under contract, a new homeowner may wish to take on your investment. But this can make your home a challenge to sell.
Similarly, if you are still paying on a loan, solar loan or equity loan, and need to move, you will need to consider how to transfer ownership to the new owner. In some cases, homeowners find advantages to employing an industry professional to dismantle the panels and move them to the new home.
Best case scenario, you own the panels outright. Your home value can appreciate an extra 4% with the added value of energy independence for the new owners. Sadly, you’ll need to start over with a new solar installation at your new residence.
What role does the utility company play?
If your home is rural and you are off the electric grid, it’s simple. None. You are energy independent and should consider systems that make your energy reliable like a battery pack and multiple renewable energy sources. Beyond solar panels, other sustainable energy options may be appropriate to power your home. Read our 5 Eco-Friendly Renewable Energy Sources for Homes to find out more.
For homes that are grid-tied, the utility company and homeowner develop a power purchase agreement (PPA). Basically, it's a contract between the energy seller, the homeowner, and the energy purchaser who is generally the utility company.
Pro-Tip: If you are leasing your panels, be sure to understand if you or the third party will be signing the PPA. In some cases, the leaser buys electricity from the utility and the third party sells the energy generated on your roof.
There are even more ways to Go Solar!
Maybe you really want to go solar, but major home energy renovations are not an option at this time. Or, perhaps you already partially power your home with the sun. You can still decrease your dependency on fossil fuels. If you live in a state with deregulated energy providers, switching to a renewable energy plan for all or some of your power source is easy and affordable.
Are you tired of paying high energy bills? With Price to Compare, you have the power to lower your home’s cheapest electric rate. Our energy price comparison tool makes comparing rates fast.
Access our energy marketplace in 3 Easy Steps:
- Enter your home’s zip code.
- Choose the best electric rate and plan for you, including renewable options.
- Save more on your home electric bills.
Pro-Tip: To save time, have your current electricity bill available.
Pro-Tip: If installing solar panels isn’t an option for your home, there are local community solar opportunities worth looking at. Community solar can be a local solar farm or solar installation shared by a number of local residents.This divides the costs and allows eco-minded individuals to access the sun’s abundant energy.
Price to Compare is your go-to energy expert. We believe knowledge is power and want to help you make wise choices for your energy budgets. Understanding the pros and cons of buying vs. leasing solar panels can mean the difference between a financial burden and energy freedom. You can rely upon our experience in the industry as our energy professionals work every day to stay up-to-date on the latest market trends. Contact us today to work with our team!