Installing solar panels on your roof has a lot of benefits, but it comes with a high initial cost. That makes leasing them become an intelligent option sometimes.
In this post, I am to give you my opinion if you should lease or buy solar panels, the advantage and disadvantages of each option, and which one is the better option for you.
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What is the difference between leasing and buying solar panels?
The main difference between leasing and buying solar panels is that when you buy solar panels, you own them, you pay the money upfront, but you own everything, and when you lease them, someone else or a company owns the solar panels, you pay that person or company to use the solar panels.
Buying Solar Panels
The main advantage of buying solar panels is that you own them, basically, you can do anything with them but there is a high upfront cost associated with it, which is why some people prefer leasing them instead.
Advantages of buying solar panels
Here are some of the advantages of buying solar panels for your home.
Eligible for Rebates and Incentives
When you buy solar panels you become eligible for rebates and incentives from the federal and local governments.
Depending on your state, you may or may not be eligible for a tax credit for the purchase of solar panels.
The disadvantage of buying solar panels
The main disadvantage of buying your solar panels is that you will need to pay for them, in your economic situation does not allow this can be a big problem.
The second disadvantage of buying solar panels is that you will need maintenance, this can be simple things like cleaning them and cutting the trees to avoid shadows.
Leasing Solar Panels
Leasing solar panels make the switch to solar energy more attainable for customers who may not have the cash reserves required for the upfront investment in solar panels.
What does it mean when solar panels are leased?
Leasing solar panels mean you do not own them. Rather, a third party owns the equipment. You pay that third company to use the solar panels.
Pros of Leasing Solar Panels
Here are some pros of leasing solar panels
You Avoid Upfront Costs
The main advantage of leasing solar panels is that you will avoid upfront costs, you do not need to pay the whole cost to purchase them, a third part company will pay for the panels, and you just need to pay the lease fee which is a fraction of the total cost.
You Can Avoid Installation and Maintenance Fees
Solar panels need to be installed and once in a while they will need maintenance, this can come with some costs since you do not own the solar panels, and you do not have to pay for any of these costs.
Cons of Leasing Solar Panels
Here are some disadvantages of leasing solar panels.
It Costs More in the Long Run
I know leasing solar panels have a lower initial cost, but in long run, you will end up paying more than you would pay if you just bought them in the first place.
You Don’t Receive Rebates or Tax Credits
Since you do not own the solar panels, you are not eligible for rebates and tax credits, having taxi credits can improve your personal finances.
Having a Lease Can Scare Away Homebuyers
Having solar panels on the roof of your house can increase the value of your house by up to 17%, and it can increase the chance to sell your house by 20% but the issue is that if you lease them, it might scare them away.
The reason for this is that since you own the house, and the third party company owns the solar panels, the potential homebuyers will have to negotiate with you and that third party company, and most of the homebuyers will avoid that.
You Miss Out on a High ROI
Solar panels have a return of investment between $10,000 and $30,000 on electricity over the lifetime of a solar panel system.
Since you do not own them, this money will not go into your pocket, it will go into the third-party company that owns the solar panels.
How can I get out of a solar panel lease contract ?
Solar lease buyout
The first option is to buy out the remaining part of the solar lease or keep making monthly payments.
Most solar panel leasing companies will let you buy the solar lease after 5 to 7 years of using the solar panels.
Purchase the solar PV system
Some companies will allow you to purchase the solar panel system in its entirety marketplace value, if your finances allow it, for me this is the best option.
Transfer your solar lease agreement
You can transfer the solar lease agreement to someone else, this happens for example if you sell the house. This is the hardest part of getting out of the solar lease agreement.
my recommendation is that it is a good practice always to lease the lease agreement clause in your solar contract, most of the time the contract will provide the conditions to end the lease.
Is it better to lease or buy solar panels?
So when it comes to if you should lease or buy solar panels here is my take. Owning or leasing solar panels both allow homeowners to enjoy utility bill savings while helping the environment.
Leasing is better if you want to get started with solar without a large initial investment while owning is the best way to save money long-term.