Is It Better to Own or Lease Solar Panels? Considerations for Homeowners Explained

Installing solar panels on your house has several benefits. While the electricity rate in the US is quite low compared to other countries, according to the U.S. Energy Information Administration, one in four households experiences energy insecurity yearly.

This is where the increasing financial incentives of installing solar panels come in. However, there’s a big decision to make – is it better to own or lease solar panels. Let’s find out:

How Does Solar System Leasing Work?

Buying solar panels involves paying for the entire expense out of your pocket. On the other hand, paying a monthly charge to utilize solar panels set up on your property but owned by the lease provider is known as solar leasing. Your monthly power cost goes down since you can utilize all the electricity produced by the solar energy system. Generally, leasing abides by these rules:

• Installing solar panels and providing continuous system maintenance are the responsibilities of the firm that granted your lease.
• By signing a contract, you agree to rent the solar panels in return for a predetermined amount of time — usually 15 to 25 years — and to pay a monthly charge throughout that time.

Now that you know how buying and leasing works, let’s take a look at the differences:

Buying vs. Leasing Solar System

Financial Considerations

Upfront Costs
Owning Solar Panels

• High Initial Investment: The first thing that comes to mind when thinking about if is it better to own or lease solar panels is the cost. Purchasing solar panels outright can require a substantial initial investment. Depending on the size and type of the system, the cost can range from $15,000 to $30,000. For example, a 6kW solar panel system will cost between $10,200 and $15,200.
• Incentives and Rebates: Homeowners can take advantage of federal tax credits, state incentives, and local rebates, which can significantly reduce the net cost of the system.
• Loan Options: Many homeowners finance their solar purchase through solar loans, which can spread the cost over several years.

Leasing Solar Panels:

• Low to No Upfront Costs: Leasing solar panels typically involves little to no upfront payment. This can make solar energy more accessible to those who might not have the capital for an outright purchase.
• Fixed Monthly Payments: Lease agreements usually involve fixed monthly payments, which can be less than current electricity bills, leading to immediate savings.

Long-Term Savings

Owning Solar Panels

• Higher Long-Term Savings: By owning the system, homeowners can enjoy free electricity once the system is paid off, leading to significant savings over the system’s 25 to 30 years lifespan.
• Increase in Home Value: Solar panels can increase property values. Studies have shown that homes with owned solar systems sell for more than comparable homes without solar.

Leasing Solar Panels

• Predictable Savings: Lease agreements can offer predictable savings, but these savings are generally less than those realized by owning a system outright.

Maintenance and Responsibility

Owning Solar Panels

• Maintenance Responsibility: You, as the owner, are responsible for maintaining the system. While solar panels require minimal maintenance, any repairs or replacements will be at your expense.
• Control Over System: Ownership gives you complete control over your solar system. You can modify, upgrade, or expand your system as needed.

Leasing Solar Panels

• Managed Maintenance: The leasing company usually takes care of maintenance and repairs, which can be a significant advantage if you prefer a hands-off approach.
• Potential Restrictions: Lease agreements may come with certain restrictions, limiting your ability to make changes to the system or requiring approval for any modifications.

Contract Terms and Flexibility

Owning Solar Panels

• No Contractual Obligations: Once purchased, there are no ongoing contractual obligations. You have full ownership and autonomy.
• Flexibility: Ownership provides flexibility in terms of selling your home. Solar panels can be a selling point, and there’s no need to transfer a lease agreement to the new owner.

Leasing Solar Panels

• Long-Term Contracts: Leasing agreements typically span 20 to 25 years, and breaking the contract can be difficult and costly.
• Transferability: If you sell your home, the lease must be transferred to the new owner, which can complicate the sale process. Some buyers may be wary of assuming a lease agreement.

Environmental Impact

• Reduction in Carbon Footprint: Both owning and leasing solar panels reduce your reliance on fossil fuels, decreasing your home’s carbon footprint.
• Sustainable Energy Source: Both options contribute to the broader adoption of renewable energy, helping combat climate change.

Personal Preferences and Lifestyle

Owning Solar Panels

• Long-Term Commitment: If you plan to stay in your home for a long time, owning solar panels can be a better investment.
• Preference for Ownership: Some homeowners prefer owning assets rather than leasing, enjoying the full benefits of their investment.

Leasing Solar Panels

• Short-Term Flexibility: If you don’t plan to stay in your home long-term, in the debate of is it better to own or lease solar panels, the latter option makes more sense, as it requires less commitment and offers flexibility.
• Ease of Access: Leasing provides an easier entry point into solar energy, particularly for those who might not qualify for solar loans or have the upfront capital for purchasing.

Future Considerations

Technological Advancements

• Upgrades and Improvements: Owning allows you to upgrade your system as new technologies emerge, while leasing might lock you into older technology for the duration of the contract.
• Energy Storage Solutions: With advancements in battery storage, owning a solar system could provide more opportunities to become energy-independent and reduce reliance on the grid.

Ultimately, the decision hinges on your current financial situation, your willingness to take on maintenance responsibilities, and your long-term energy goals. Weighing the pros and cons of each option can help you determine the best path forward for integrating solar energy into your life.

Here’s a quick recap to help you compare buying vs. leasing solar system

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