| Key Takeaways |
|---|
| Leasing and Buying Comparison: Understand the cost dynamics and long-term benefits of both options. |
| Leasing Pros and Cons: Identify the immediate financial relief and long-term limitations of leasing. |
| Buying Pros and Cons: Evaluate the initial investment and substantial long-term savings. |
| Decision Criteria: Learn the key factors guiding the choice between leasing and buying. |
$50 – $250 Monthly Cost To Lease (10- to 25-Year Term)
Leasing solar panels typically costs between $50 to $250 per month, depending on several factors including term length, monthly payments, and annual rate increases. Most lease agreements span between 10 to 25 years.
$12,600 – $31,500 Average Cost To Buy (After 30% Federal Tax Credit)
Purchasing solar panels generally requires an initial investment ranging from $12,600 to $31,500 after applying a 30% federal tax credit. This cost can be offset over time through savings on utility bills and participation in net metering programs.
Leasing vs. Buying Solar Panels
Leasing vs. Buying Solar Panels
| Factor | Leasing Solar Panels | Buying Solar Panels |
|---|---|---|
| Average Cost | $50 – $250 per month | $12,600 – $31,500 total* |
| Key Differences | ||
| – The company owns and maintains the solar panels. | – You own and maintain the solar panels. | |
| – You are not eligible for solar tax credits and incentives. | – You qualify for the 30% federal tax credit and other solar incentives. | |
| – Selling your home mid-lease may be challenging. | – Your property value typically increases. | |
| – The total cost varies based on term length, monthly payment, & annual rate increases. | – You are eligible for net metering programs. | |
| – You are not eligible for net metering programs. | – After the breakeven point in 6 to 10 years, you enjoy free electricity for the life of the panels. |
Key Facts About Leasing Solar Panels
Leasing solar panels involves entering into an agreement with a solar company that retains ownership of the panels. The company is responsible for their maintenance and any repairs required. Although this means less hassle for homeowners, it also entails a series of financial implications, including an annual increase in monthly payments due to an escalator clause.
Key Facts About Buying Solar Panels
Buying solar panels involves a significant upfront expense but provides financial advantages over time. Homeowners who purchase panels are eligible for substantial federal tax credits and other incentives, which can significantly reduce the effective cost. Furthermore, owning panels allows participation in net metering programs and often increases property value.
Pros And Cons Of Leasing Solar Panels
Pros And Cons Of Leasing Solar Panels
| Pros | Cons |
|---|---|
| – You pay little to no upfront costs. | – Your property value stays the same. |
| – The company maintains the panels. | – You save less money over time compared to buying. |
| – Using solar power reduces or eliminates your monthly utility bill. | – Your monthly lease payment increases annually due to the escalator clause. |
| – Leases are typically approved more quickly than solar loan applications. | – Selling your home mid-lease may be difficult. |
| – You don’t own the panels or qualify for tax credits or incentives. | |
| – You can’t participate in net metering programs to sell excess power back to the grid. |
Solar Lease vs. PPA
A Power Purchase Agreement (PPA) is another option similar to leasing. In a PPA, the homeowner agrees to purchase the electricity generated by the solar panels at a set rate per kilowatt-hour, rather than leasing the panels outright. Both options offer little to no upfront costs and maintenance-free benefits, but neither allows the homeowner to take advantage of tax credits or incentives.
Pros And Cons Of Buying Solar Panels
Pros And Cons Of Buying Solar Panels
| Pros | Cons |
|---|---|
| – You’ll qualify for tax credits and incentives that help lower the cost. | – Buying often requires a large upfront investment. |
| – Your property value typically increases. | – You are responsible for maintenance and repairs. |
| – Monthly loan payments do not increase each year like lease payments. | – The savings are not as high if you’re planning to sell your home. |
| – You save more money over time. | – Loan applications typically take longer to approve than leasing applications. |
| – You can participate in your utility company’s net metering program to sell excess power back to the grid. |
Payment Options
When deciding to buy solar panels, homeowners can choose between several payment options such as cash purchase, solar loans, or home equity loans. Each has different requirements and implications, mostly revolving around the cost of loans and the speed of approvals.
Is It Better To Lease Or Buy Solar Panels?
Whether to lease or buy solar panels depends on individual financial situations, long-term goals, and preferences for ownership and maintenance responsibilities.
When To Lease Solar Panels
Leasing might be a better option for those who:
- Have little to no upfront cash for the purchase.
- Want to avoid maintenance responsibilities.
- Are looking for a short-term solution without commitment to homeownership.
When To Buy Solar Panels
Buying might be suitable for those who:
- Have sufficient capital or can qualify for loans.
- Are interested in maximizing long-term financial benefits.
- Want to increase their property value and benefit from tax incentives.
Getting Estimates From Solar Panel Contractors
Before making any decisions, it is prudent to get multiple estimates from reputable solar panel contractors. Evaluating different offers will help identify the most cost-effective and beneficial option for individual circumstances.
Questions To Ask A Solar Panel Installer
When consulting with solar panel installers, consider asking the following questions:
- What financing options do you offer?
- Can you provide detailed estimates and potential savings over time?
- How do you handle maintenance and warranty issues?
- What happens to my lease or loan if I sell my house?
- Are there local or state incentives I should be aware of?
In summary, the decision between leasing and buying solar panels significantly depends on your financial standing, long-term homeownership plans, and willingness to manage maintenance. Understanding the key differences, costs, and benefits of each option will help you make an informed choice that aligns with your energy needs and financial goals.
