It’s very much the case that energy costs continue to rise while valid environmental concerns continue to grab headlines and gain momentum.
It’s a combination of these factors that’s driving more homeowners to turn to solar energy. On the face of it, it’s a smart move for both the planet and your wallet.
Ultimately, you want the best solar panels at the lowest cost possible. That often leads people to question whether you should buy or lease your solar panels. Either option gives you access to solar energy, but the financial structure, long-term value, and control over your system can differ drastically, depending on which way you go.
Here’s a complete rundown of buying versus leasing solar panels, so you can decide what’s right for your situation.
Getting help with your purchase
When you buy solar panels, you have the choice of either paying for them outright or financing them with a loan. Although this is a large upfront investment, ultimately, you become the owner of the system.
That ownership comes with several key benefits. First and foremost, you get to keep all the financial incentives. Federal and state tax credits, solar renewable energy certificates, and local rebates all go towards helping you ease the financial burden.
All of these incentives can significantly lower the overall cost of your system, especially if the Federal Investment Tax Credit is still in place, which allows you to deduct a percentage of the system’s cost from your federal taxes.
You can also look at the DIY route of ownership. Buying your own kit and installing yourself is a great way of accessing the advantages of owning solar panels at a lower upfront cost.
Benefit from energy savings
It is also worth noting that owning your solar panels also means you benefit directly from the energy savings. The electricity your system generates reduces or even eliminates your monthly utility bill. These are savings that can quickly add up to a significant sum of money over time.
With that in mind, you can often find that most systems pay for themselves within six to ten years, and after that, the electricity is essentially free for the remaining life of the system, which can be 25 years or more.
Another major advantage of buying your panels is that it often helps increase the value of your home. It has been consistently demonstrated that homes with owned solar systems tend to sell faster and command a premium compared to homes without solar or those with leased systems.
It’s easy to see why this is the case as the new owner can enjoy the benefits of the system without taking on someone else’s lease.
A look at leasing
On the flip side, leasing solar panels usually means entering into a long-term agreement. This can be typically anywhere between 20 and 25 years. What happens under this arrangement is that a third-party company installs and maintains the system on your roof.
The obvious short-term financial benefit is that you don’t pay a significant upfront sum for the system itself. Instead, you pay a fixed monthly fee, or in some cases, a rate for the power the panels generate.
This setup carries significant appeal if you are a homeowner who wants solar energy, but without the big initial expense.
On top of that, leasing also removes the burden of maintenance off your shoulders. The leasing company typically monitors the system and handles repairs. If you don’t want to deal with maintenance tasks, or an added element of financial risk that comes with outright ownership, this can be a big selling point.
However, this convenience comes at a cost. You’re essentially renting your energy savings. You won’t be eligible for tax credits or incentives, since the leasing company technically owns the system. And your total savings over the long term will likely be lower compared to the option of buying your panels.
Also, one of the biggest drawbacks of leasing is what happens when you move. A solar lease can complicate the home-selling process. You might also find that some buyers are hesitant to take over a lease, especially if the monthly payment cuts into the savings or if the terms are unclear.
In many cases, you may end up having to pay off the remaining lease balance or convince the buyer to assume it. Either way, it can be a hurdle that has the potential to slow down or even derail a sale.
Lastly, when it comes to leasing, there’s also the question of how much control you have. When you lease, you can’t modify or upgrade the system. You may also be locked into escalation clauses, which triggers annual increases in your monthly payment. Having that lack of financial control can quickly eat into your savings over time.
Borrowing the money to buy outright
Financing a purchase with a solar loan is a third option to consider. With this scenario, you get the benefits of ownership, such as tax credits, increased home value, and long-term savings, but without the need to pay the full cost upfront.
Monthly payments can often be comparable to a lease, but at the end of the loan term, you own the system outright. You will also discover that many solar loans have low interest rates and flexible terms, making them easily accessible.
All things considered, especially in terms of return on investment, buying almost always wins out in the long run.
Ultimately, the decision between buying and leasing solar panels comes down to your financial situation and personal preferences. It is also about how much control you want over your system. If you’re looking for maximum long-term savings and added property value, buying is the option that is a clear winner.
Remember, you also have the ability to keep your purchasing costs as low as possible by going down the DIY installation route. Talk to a supplier and discover how switching to solar is a step toward lower energy bills and a cleaner footprint.
