Leasing Solar Panels: Pros and Cons

Should You Lease Solar Panels?

While purchasing a solar panel system is a significant investment, leasing solar panels has become a popular alternative. In this blog post, we’ll delve into the pros and cons of leasing solar panels, helping you make an informed decision about whether or not it's the right option for you.

What is Solar Leasing? 

Solar leasing involves an agreement with a solar leasing company allowing you to "rent" a solar panel system for a specific period. Unlike buying solar panels, leasing eliminates the upfront costs associated with buying and installing the system. Instead, you pay a monthly fee to lease and use the solar panels.

How Does Leasing Solar Panels Work?

When you opt for a solar lease, the leasing company installs, maintains, and repairs the solar panel system. You benefit from the electricity generated by the panels while the leasing company retains ownership. The lease typically lasts 10 to 20 years, allowing you to enjoy the advantages of solar energy without the burden of ownership.

What is a Solar Power Purchase Agreement (PPA)?

A Solar Power Purchase Agreement (PPA) is similar to solar leasing. Under a PPA, a third-party provider installs and maintains the solar panels on your property. However, instead of paying a fixed monthly lease fee, you agree to purchase the electricity generated by the panels at a predetermined rate. PPAs can be an attractive option for those who prefer not to lease but still want to access solar power without the upfront investment.

Is Leasing Solar Panels Worth It?

Determining whether leasing solar panels is worth it depends on various factors. While it eliminates the need for upfront costs and offers potential savings on electricity bills, it's essential to consider the long-term financial implications and the limitations of not owning the system. Let's explore the pros and cons to help you make an informed decision.

Pros of Leasing Solar Panels:

1. Lower upfront costs: Leasing allows you to access solar energy without a significant upfront investment, making it more affordable for many.

2. Maintenance and repairs included: With a lease, the responsibility for maintenance and repairs typically falls on the leasing company, saving you time and money.

3. Potential savings on electricity bills: Using solar energy can reduce your reliance on the grid and will likely lower your monthly electricity bills.

4. Flexibility to upgrade technology: Leasing provides the flexibility to upgrade to newer and more efficient solar panel technology at the end of the lease term.

Cons of Leasing Solar Panels:

1. Limited financial benefits: As a lessee, you don't benefit from the financial incentives, such as tax credits and rebates, that are available to solar panel owners.

2. Long-term expenses: Leasing solar panels means paying a monthly fee over the lease term, which can add up to more than the cost of purchasing a system over time.

3. Lack of ownership and associated drawbacks: Not owning the solar panels means missing out on the potential increase in property value and the ability to generate additional income through selling excess electricity.

4. Potential limitations in system customization: Leased systems may restrict modifications or customizations, limiting your ability to tailor the system to your specific needs.

Buying vs Leasing Solar Panels

When considering solar energy options, it's important to compare the benefits and drawbacks of leasing and buying. Here are some key points to consider:

Ownership and Financial Benefits:

• Buying: Purchasing a solar panel system gives you full ownership and control over the system, allowing you to benefit from financial incentives like tax credits, rebates, and the potential increase in property value.

• Leasing: With a solar lease, you don't own the system, which means you don't have access to the same financial incentives. However, you can still benefit from potential savings on electricity bills and the elimination of upfront costs.

Long-Term Expenses:

• Buying: While purchasing a solar panel system requires a higher upfront investment, it can lead to long-term savings as you become energy independent and potentially eliminate or reduce your electricity bills over time. Additionally, owning the system means you won't have ongoing lease payments.

• Leasing: Leasing solar panels involves paying a fixed monthly fee over the lease term, which can accumulate to more than the cost of purchasing a system in the long run. It's essential to carefully assess the total expenses over the lease period to determine the financial viability of leasing.

Maintenance and Repairs:

• Buying: As the owner, you are responsible for the maintenance and repairs of the solar panel system. While this means you bear the associated costs, you also have more control over the quality and timing of maintenance.

• Leasing: When you lease solar panels, the leasing company typically takes care of maintenance and repairs. This relieves you of the responsibility and potential costs, as the leasing company is responsible for ensuring the system's optimal performance.

Flexibility and Customization:

• Buying: Owning the solar panel system provides you with the flexibility to customize and expand the system according to your changing energy needs. You have the freedom to choose specific technologies and tailor the system to your preferences.

• Leasing: Leased systems often come with limitations on modifications and customizations. Since you don't own the panels, you may have limited flexibility to upgrade or make significant changes to the system during the lease term.

Key Takeaways:

• Leasing solar panels can be an affordable way to access solar energy without the upfront costs.

• It eliminates the need for maintenance and repairs typically handled by the leasing company.

• Potential savings on electricity bills can be achieved by utilizing solar energy.

• Upgrading to newer technology is possible at the end of the lease term.

• However, there are limitations to the financial benefits, long-term expenses, and lack of ownership associated with leasing.

• Customization options may also be restricted compared to owning a solar panel system.

• Consider financial implications, available incentives, and personal preferences when deciding between buying and leasing.

Frequently Asked Questions (FAQ)

• Can you negotiate a solar lease?

  In some cases, it is possible to negotiate the terms of a solar lease. However, the flexibility and extent of negotiation depend on the leasing company's policies and offerings.

• Do solar leases count as debt?

  Solar leases are typically considered operating leases rather than debt because they're not classified as a liability on your balance sheet. Talk with a financial professional for specific accounting implications.

• What credit score do you need for solar panels?

  The credit score requirements for leasing solar panels can vary among different providers. While there is no universal minimum credit score, a higher credit score generally improves your chances of securing favorable lease terms. Some leasing companies also offer options for individuals with lower credit scores.

• Can you write off a solar loan?

  The ability to write off a solar loan, including the interest paid, depends on the tax laws of your jurisdiction. In some cases, the interest on a solar loan may be tax-deductible. It's recommended to consult with a tax professional or accountant to determine the specific tax benefits available to you.

  Remember, thorough research and seeking expert advice can help you make an informed decision about leasing solar panels and pave the way for a sustainable and cost-effective transition to solar energy.

Conclusion

Leasing solar panels provides a viable option for homeowners and businesses to embrace solar energy without the upfront costs and maintenance responsibilities. It offers advantages such as lower initial investment, included maintenance, and potential savings on electricity bills. Compare these benefits against the limitations of not owning the system, potential long-term expenses, and the absence of financial incentives available to solar panel owners. By considering your financial situation, long-term goals, and preferences, you can make an informed decision about whether leasing solar panels aligns with your energy needs and budget.

Remember, every situation is unique. Consult with solar energy professionals to determine the best approach for your circumstances. By carefully evaluating the pros and cons, you can make a confident choice that aligns with your goals for sustainability and cost-effectiveness.

Related Articles