One of the first decisions you’ll need to make when switching to solar is whether you will purchase or lease your panels. So, should you purchase or lease solar? If you’re not sure what the difference is yet, don’t worry! This blog post will walk you through both options and their advantages, as well as other important things to know. Solaris Renewables only offers solar ownership (including financing options), and we do not recommend leasing solar panels. However, keep reading to determine which is best for your needs.
Purchasing vs. Leasing: What Do These Terms Mean?
Purchasing: Your solar system belongs to you for its entire lifespan, typically 30-40 years. You won’t have to uninstall and return your panels after a certain number of years or worry about a contract expiring. Some solar purchasers pay upfront, but you can also finance your panels with a loan.
Leasing: Your solar system is essentially “borrowed.” After about 20-30 years (which is when most solar lease contracts expire), a solar installer hired by your leasing company will remove the solar system. You can also choose to continue the lease or buy out the system. Lessees typically pay in monthly installments.
Purchasing Solar Panels
Financing Solar Panels Through Cash or Solar Loan
Purchasing solar is one of the only energy sources where you see your lifetime costs upfront. For instance, when you look at a solar proposal, it will include the total cost of the system, but when you get your electricity from the grid, you only see the cost for that power monthly, and you don’t see how much you’re going to be paying over any period of time, or how much you’ve already paid. That’s why solar loans are a good option; solar loans give you the ability to pay for the system monthly (like an electric bill) while not receiving an electric bill from your utility company.
When you take out a loan to finance your solar system, you’ll still receive all the incentives, and typically, you’ll pay your system off within 6-10 years. From our experience, most of our customers pay off their system within 10 years or under, while potentially eliminating your electric bill. Take a look at some loan options here. Loans are typically arranged so your monthly payment is equal to or less than your current electric bill, so even in the short term you’re still saving.
Our customers typically save 40-50% while they’re paying for your system. Once the system is paid off, our customers usually notice 100% savings because they’re typically not paying an electric bill, and there’s no longer a bill for their solar system.
When you switch to solar, you’re no longer using as much energy from the grid, which means you’re also not paying the exorbitant fees associated with traditional energy systems. With electric rates increasing about 5% every year, you’ll likely end up paying more in electricity from the grid than you would by purchasing solar. It’s estimated that the average total lifetime savings of a solar system is nearly $140,000. You’ll save thousands on long-term energy bills with solar, especially when you purchase, because you only receive incentives when you own your panels. Quality solar panels are built to last for decades (upwards of 30-40 years or more), so as an owner, you can continue saving with solar for a long time.
Available Solar Incentives
There are federal and state incentives available for solar owners. Massachusetts, Maine, New Hampshire, and many others offer tax breaks or rebates, which solar lessees aren’t eligible for. Only those who purchase their solar system outright or through a loan are eligible for solar incentives. Some of these incentives include a 30% federal tax credit, net metering, and more.
Increased Home Value
Many prospective home buyers want solar because of the financial and environmental benefits. Zillow reports that solar-equipped homes on a national level sell for about 4% more than non-solar equipped homes, and the US Office of Energy Efficiency & Renewable energy states that a home’s value increases by $4 for every watt of solar installed. Since the average residential solar system installation is 6 kW, your home’s value can increase by over $20,000 if you purchase solar. Solar residences sell about 20% faster than non-solar homes as well. Not to mention, Massachusetts homeowners are in luck because we’re considered one of the best states for solar power, and buyers here are especially drawn to solar systems. Homes with purchased solar panels in Massachusetts sell for considerably higher than homes without solar panels. As of 2023, the demand for solar homes is higher than it’s ever been.
If you own solar and are selling your home, the process is surprisingly simple. Generally, owning your panels makes it easier to transfer ownership from buyer to seller. Selling a home with leased solar panels can be a bit more complicated, undesirable, and difficult legally (which we’ll get into later).
Maintenance of Purchased Solar Panels
Unfortunately, things happen. All of our solar panel systems are designed to survive time, harsh weather, and other common issues, but repairs are necessary every now and then. Luckily, all of our offerings come with superior warranties, with typical coverage of 25-40 years. When you own your solar panels, all repairs or replacements are generally handled through the solar installer (in our case, we service our customers). Even with a warranty, though, you might still need to contribute, as some warranties may not offer full coverage. Talk to our solar experts to confirm your whole system will be covered within the warranty timeframe. Solaris Renewables’s warranties are among the best and most comprehensive in the entire solar industry.
Third Party Ownership (Including Solar Leases and PPAs)
Financing Solar Panels Through a Lease or PPA
If you’re looking to avoid down payments or a credit check, leasing might be the best option for you. You’ll get a bill every month for the course of your contract, which is usually between 15-25 years. It depends on the size of your solar system, where you live, and other factors, but expect to pay about $30-$250 a month. In most cases, you don’t need an established credit score for solar leases, unlike with solar purchases.
You will typically lease your system through a sales organization, who will work with a third party financing company. The financing organization will work out the finances, and then another third party solar installer will perform the installation of your solar system.
No Available Solar Incentives
Unfortunately, you’re not eligible for incentives using a lease, but the person who owns the system is. You can, however, still enjoy the benefits of solar power, including a cleaner energy system and lower electric bills. If you lease, you can still save about 10-30% on your electric bill.
Inconclusive Home Value Change
If you’re not looking to sell your home anytime soon, a solar lease could be a great option for you. While a solar-equipped home can be attractive to many buyers, leasing makes selling your home a bit more complicated. First, it might not be as appealing that the panels will “expire,” or that they’re not technically yours. There’s also the issue of finding a buyer who’s willing to pay the rest of the lease. Sometimes, this isn’t a problem – if there’s only a year or two left of your lease, you’re in a better position. However, if there’s some more time left of your lease, you might experience difficulty finding someone who wants to pay a monthly bill for that long. It’s not as simple as just opting out of the lease, either. In most cases, you’re bound to keep your solar panels for a certain period of time, so you can’t just back out if you do decide to sell.
Leases can still be transferred to a new owner. Most leases also give you the option of a “buyout,” meaning you can stop your lease and purchase the solar system. It will be expensive, but it’s nonetheless an option if you do change your mind and want to sell. Because the panels technically do not belong to you, there’s no guarantee that your home will sell faster or for more money, but that doesn’t necessarily mean the value of your home will depreciate.
Maintenance of Leased Solar Panels
Although solar panels are crafted to be low-maintenance, issues can arise. When you lease your panels with a trusted provider, most problems are covered by the third-party owner (so this wouldn’t be you, since you’re just leasing your solar panels). You’ll still be responsible for smaller occurrences – like a light cleaning – but your third-party owner should organize bigger repairs or replacements.
It’s important to be cautious when selecting a third-party owner. In the event that your panels malfunction or require a repair, you need to be able to get in contact with the company you leased from, and they will usually contact a third party company to fix the problem. Some solar lessees have had trouble reaching the original solar installers and/or the company they leased from, leaving them with damaged or broken solar panels.
We Recommend Purchasing Solar Over Leasing It
Purchasing and leasing solar panels are both great options to cut your electrical bill and go green, and the right choice depends on your personal budget and needs. However, solar purchasing is a better move if you have a good credit score. We whole-heartedly recommend purchasing your solar panels – either outright or through a solar loan – to maximize your savings, home value, and more. One of our Project Developers will be happy to discuss financing in more depth with you.
Go Solar With Solaris Renewables
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