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Solar Lease Vs Buy



Amy BeaudetAmy Beaudet was in the solar industry at the altE Store from 2007 until her untimely passing in 2021. She was a sales rep, instructor, and an all-around solar evangelist, sharing her passion for solar around the world. When whe wasn't at work, she enjoyed sailing and skiing - but odds were good she was still talking about solar on the boat or on the slopes. See more of Amy Beaudet's blog posts.




solar lease vs buy



One of the most important homeowner questions when purchasing solar panels is whether they should lease or buy. We have received a lot of questions from homeowners who wonder if a solar panel installation might be right for their home, and most include questions surrounding a lease vs. buy conversation. Unfortunately, it is a more in-depth decision than just the cost of solar panels, but we are experienced on talking through the different situations where a lease or buy makes sense for your home. Below we get into a basic look at the pros and cons of each option:


There are three ways to purchase solar panels: cash, solar loans and solar leasing, otherwise known as a power purchase agreement (PPA). The best way for you to enjoy the benefits of clean, renewable energy depends on your particular needs and financial goals.


Moving a solar system from your home is costly and not a great idea, especially since solar panels increase the value of your home, leading to a higher selling price as well as less time on the market. In fact, there is research on it.


There are a lot of factors that could influence your final solar panel cost, which can be confusing. However, the key takeaway is knowing that the price is truly specific to your home and your needs.


Thankfully, solar leasing offered an affordable alternative, allowing people to benefit from solar energy without having to fork out thousands of dollars for the upfront cost. Fast forward to today, and this system is still helping thousands of Americans install solar panels on their property.


Solar panel leases cost between $50 and $250 per month, on average. The exact amount the homeowner pays depends on the amount of energy they use at home, the company supplying the lease, their location, and their credit score.


The customer can choose between a number of financing options that best suit their needs. And whilst some solar companies require a downpayment for the lease, most allow you to lease the system with no upfront costs.


Most lease suppliers provide the option of a no-cost upfront payment, whilst others offer the option to pay for just part of the system. Either way, this system makes solar panels accessible to more households around the US, rather than just well-off homeowners.


Most solar lease contracts last for 20 years, which is a long time to be tied to something financially. Not only is this an inconvenience, but it can also cause a bit of trouble if you want to move homes during this time.


In the early 2000s, solar leasing quickly became one of the most popular ways to invest in solar. Back then, a solar panel system could set you back more than $50,000, which is why leasing them was more achievable.


Starting this year, for instance, most new homes in California will be required to have solar panels. But many homeowners in the state have already rushed to add solar panels and batteries to their houses as they grapple with increasingly frequent blackouts.


Sunrun, which sells solar panels primarily through long-term lease agreements, in October saw traffic spike 1,500% to the page on its website that explains how to power through blackouts, shortly after California's Pacific Gas & Electric cut power proactively to thousands of people hoping to prevent wildfires.


During the October blackouts, Sunrun's California customers with solar and battery systems kept their lights on for more than 36 hours on average, and one Sonoma County family powered their home for nearly six straight days.


If you have the cash, most experts agree that buying a solar system outright is a better investment than leasing or taking out a loan. Customers should check electric bills to estimate monthly energy use when deciding what size system to buy and calculate federal or state incentives. Check with your state's department of energy or a database like DSIRE.


"Conserving the amount of electricity that you use and installing solar go hand in hand," Spencer Fields, a content manager at clean-energy marketplace EnergySage, told CBS News. "You can have one without the other, but it makes more sense to do them together."


With an array costing $20,000 or more, solar companies and others are increasingly offering loans to help alleviate the upfront cost. The solar loan market grew 40% in early 2019 from the same time last year, according to Wood Mackenzie.


Sunrun estimates that customers who lease panels save 10% to 40% on their electric bills. Customers can choose a fixed monthly rate or start out with a lower monthly payment that increases over time. Leases at Sunrun typically last about 25 years.


But leases have declined in recent years, as panel prices fell and loan options increased. About 28% of residential solar systems are owned by third parties, down from 62% in early 2014, according to the Solar Energy Industries Association.


"Usually it ends up being more expensive over the life of the project (to lease)," said Brett Simon, senior energy storage analyst at Wood Mackenzie. "It's economically more efficient if you have the capital to just buy a system."


That was the case for Steve Hebert in Hillsboro, Oregon, who began leasing solar panels from Solar City in 2016 before the company was bought by Tesla. When Hebert recently decided to sell his house, his real estate agent told him it would be difficult because of the solar lease. The lease could be transferred to a potential buyer, but some sales prospects wouldn't want to take it on.


Hebert tried to find out what it would cost to buy out the rest of the lease agreement and found out he wouldn't be able to buy it outright until he was five years into the contract. He wanted to find out more but said he had difficulty getting a Tesla representative on the phone, according to the AP.


Everything from diapers to cars can be bought with a subscription, and now you can add solar panels to the list. Tesla is among the companies offering solar subscriptions and will install a small, medium or large system on your roof which provides energy to your home for a monthly fee. Customers, who are still hooked up to their electric utility, pay for any additional electricity that they pull from the grid.


The cost of solar panels depends on multiple factors, but can range from $15,000 to $40,000 or more, which is why some homeowners look into a solar lease. At its very basic level, a home solar system lease means that you:


You can take advantage of the solar energy the panels produce during the lease. A solar lease essentially works by exchanging the electric bill from your utility company for a lowered bill from a solar leasing company.


Tax credit incentives cover more than just the solar panels, according to Energy.gov. Tax credit incentives can also cover your contractor installation costs, costs for inverters, wiring and/or the mounting that the panels sit on. You can also consider energy storage and sales tax as eligible expenses.


When you buy solar panels, you may be able to take advantage of state incentives such as rebates, tax credits, property tax relief, solar renewable energy certificates (SRECs) and performance-based incentives (PBIs).


A solar purchase power agreement (PPA) is a financial arrangement (not the same as a lease) in which a third-party developer owns, operates and maintains the solar system. In the case of a PPA, you, as the homeowner, would agree to put the solar system on your property and purchase the electric output from the solar services provider.


Instead of paying a monthly fee as you would with a lease, you pay for the solar power generated from the solar panels. In the case of PPAs, bigger systems will cost more. In addition, monthly costs for PPAs may fluctuate, while solar leases have more fixed prices.


If you do not want to come up with the initial amount of money you need to have in order to purchase solar panels, you may want to consider a lease. However, it's worth noting that it's very possible that you will pay more for a lease in the long run compared to paying for a solar system outright. You can pay for solar panels in several ways, including using cash, using a home equity loan or through a solar loan.


Before deciding to lease vs. buy solar panels, be sure to read up on whether your house is a good candidate to produce solar energy. And, consider the incentives you could miss out on when entering a solar lease.


While solar is the future of energy, the initial installations come at a hefty price. This makes potential users explore different financing options before they decide to go solar. Most often, the dilemma is between leasing vs buying solar panels.


If a cash purchase is not possible, going solar is still very much attainable (and profitable) with a low-interest solar loan. You can secure a personal loan from a bank, credit union or specialized solar lender like Lightstream to finance your project.


Some permit applications may require one or more plan revisions and resubmissions. Please supply us with all information necessary to make these revisions. Permit must be applied for with the city within 30 days of delivery of the permit package and any resubmissions must be resubmitted within 14 days of receiving the revised plans.


Our guarantee does not apply to installations on unsafe structures, unpermitted structures, ground mounts, structural engineering, structures not constructed to local building codes and other atypical building designs. This guarantee only applies to our standard solar system kits, it does not apply to custom orders or solar systems not designed by our engineers. 041b061a72


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