Want to get new solar panels installed? That’s a great idea! They can provide savings on energy bills and are an eco-friendly option.
However, installing new solar panels can be expensive. This is where you learn how do solar leases work.
Solar leases allow homeowners like you to use solar electricity without paying the upfront costs of solar installation. Instead, you make a monthly payment to a solar company in return for solar energy.
So, how do solar leases work? Let’s find out today!
Get A Free Solar QuoteHow Do Solar Leases Work?
Solar leases started in the 2000s. They quickly became popular as they allowed homeowners to convert to solar energy without paying even a dollar on down payments. The biggest cost of solar panels is installation, so getting rid of them can make them more accessible.
The solar company will calculate a fixed monthly fee in exchange for the power. You can also make a plan to buy the panels eventually.
However, solar panel costs are significantly cheaper now. Advances in technology and subsidies have reduced costs. Hence, solar leases might not be the best option for some people. It largely depends on your needs.
What Happens After Solar Panels Are Installed?
After the solar panels are installed, two things will occur. First, you can take advantage of the energy savings since the panels will power your home. Secondly, you will pay monthly fixed fees no matter how much you consume.
The most important thing before you sign the lease is to take a careful look at the lease agreement. Typically, the length of the lease lasts for 20-25 years.
So, you would be paying the monthly fees until the lease terms are fulfilled.
You should also carefully review the price escalator clause; it impacts your monthly bill since it might increase up to 1-5% annually. We recommend that you calculate how much savings will occur and whether the cost of the monthly payments is worth it for you and your family.
Can Tenants Get Solar Leases?
Unfortunately, you cannot get solar leases if you are renting the property.
Solar leases are only for homeowners so that they can install the panels on their properties. The reason is that leasing contracts can last for years. This makes it quite unfeasible and impractical for non-owners.
However, you can try to come to an agreement with your landlord. Ultimately, it is up to them to decide if they want to get solar panels installed.
Pros and Cons of Solar Leasing
Now that you know how do solar leasing work, we can determine its pros and cons.
Pros
Increased Accessibility
Solar leasing allows people who want solar energy but cannot buy panels to have access to this technology.
No Upfront Costs
Since you don’t have to put down a down payment for the panels, you can get the solar panel over time through monthly payments.
Electricity Bills Savings
You won’t have to rely on the electric grid for your energy anymore! That’s the best part since you can save on electricity costs when the solar panels have been installed.
Low Carbon Footprint
Since you are reducing your use of non-renewable energy, your carbon footprint will fall.
No Maintenance
Since the solar company is responsible for the panels, you don’t have to worry about maintenance or associated costs.
Energy Performance Certificate (EPC)
Getting an EPC can help you improve the property’s value. It can help in selling the property if you want to move.
Cons
Lower Savings than Alternatives
If you buy your panels, it will save you the most money. Solar loans can also lead to better savings as you will end up owning the panels.
Plus, solar leases have a long agreement lifetime. Depending on the lease terms, you will receive escalating payments. So, your electricity payment rate will increase every year; you might not save enough to have it be worth it!
No Solar Incentives
There are plenty of amazing solar tax credits and incentives launched by countries all over the world to increase solar consumption. With solar leases, the company is benefitting from these tax incentives instead of you.
Selling Your Home Can Be Tough
You may have to transfer the lease to the new homeowners. Some buyers may not want the lease, so it can decrease the pool of buyers for you.
Linked to Credit Scores
If you miss out on any payments or are late, it can have a negative impact on your credit score.
Can I Choose My Solar Panel System for Solar Leases?
Solar leases are often given out by third parties that choose the company for your solar panels. They are in touch with the installer, and the third-party owner decides the brand, size, and where to install it.
Hence, we recommend that you go over the system design before signing any paper. You should go over the fine print carefully and maybe get a lawyer to go over it. You have to make sure that there aren’t any hidden fees that you don’t understand.
For example, there might be estimated production amounts in the lease as per the size of the solar panels. However, if you consume more energy monthly or are planning some home upgrades that will increase usage, you should go over the contract once more.
Get A Free Solar QuoteCan I Sell a House on Solar Lease?
For homeowners who bought their solar panels, you will experience a quick 3-4% increase in the value of the property. Solar panels make your property quite attractive to buyers.
However, getting solar leases can honestly have the opposite effect.
For owners who want to sell their property soon, we do not recommend solar leases. This is because you will need to buy the lease from the third-party owner or company. It can cost you more than if you had just bought the solar panels yourself. The second option is to transfer the lease to the buyers, but this is not easy. A lot of buyers don’t want to overtake the lease, which can make it harder to sell the home.
Will I Save Money with Solar Leases?
Initially, yes! You don’t have to pay the upfront costs of installing a new solar panel. Over its lifetime, it will also save you 10-30% in electricity costs. The savings largely depend on where you live and what incentives the third-party owner of the panels is providing you.
For example, some states offer net metering. You will only have to pay the net difference between the energy produced by the solar panels and the energy you are using from the grid. There are also other tax benefits from solar tax credits that the third-party owner will take advantage of –not you.
We recommend that you purchase the solar panel since it means that you can take advantage of the incentives. You can also experience more cost savings of around $10,000 and $30,000 in the next 30 years. This is more than what you will save if you lease the solar panels.
Conclusion
Now that you know how do solar leases work, it’s time to make a decision!
We recommend that you only get solar leases if there are no solar loans or federal tax credits that you are eligible for.