Solar Lease Vs Solar Buy
When you want to go solar you find yourself at a crossroads where you need to choose between two financing options that offered by solar companies:
- Solar lease or Power Purchase Agreements (PPAs) which means renting the solar panel system from the solar company that owns it.
- Solar loan that means you’re the system owner.
You probably ask yourself which option will be better? Well, I would say it depends on your needs, and financial goals. Both solar loans and solar leases/PPAs offer benefits and there are multiple factors to consider before making a decision.
Thinking of the long-term:
If we take a look at the $0-down solar loans or the $0-down solar leases/PPAs, we can see how both can bring immediate results of saving only by comparing the monthly payment to the current monthly utility bill.
When looking at the “long run” Solar loan will save us more, the reason is when you’ll be done paying the loan, you own the system. When you lease it, you will keep paying the monthly lease payment and renew it again and again.
Note: Solar loan’s monthly payment usually would be fixed price, while Solar leases/PPAs will usually increase during the lease period.
Solar panel system owners qualify for a Solar Investment Tax Credit (ITC) which equals to 30% of the system cost upon installation. There are some states that even have additional incentives like Solar Renewable Energy Certificates (SRECs) and the interest which was paid on secured loans can be also used as tax deductible.
When you choose a solar loan over a solar lease, you’ll earn those incentives. On the other hand, those who chose solar lease/PPA will not be able to receive those benefits, the solar company who owns the system will get it instead.
Solar energy systems usually don’t require too much maintenance. Most of the systems will carry a 25-year warranty and the inverters will carry a 10 to 25-year warranty.
When choosing a Solar lease/PPA, the leasing company usually will offer a service program in addition to the system lease to cover for any maintenance issues during the lease term. On the other hand, when choosing a Solar loan, you, as an owner, will be responsible for any maintenance issue that will come up.
Selling Your Property:
Homeowners who are trying to sell their property will need to consider a few important points depending on the type of financing they have chosen for their system.
Solar leases/PPAs will make you buy out the lease/PPA or transfer the lease over to the new property owner.
Solar loan offers different options based on the type of loan you have – secured or unsecured. On most secured loans homeowners must pay off the remaining balance. With unsecured loans, homeowners will be able to sell their property and keep paying the remaining balance monthly.