Buying or Leasing Residential Solar: Which will work for me?
Large national solar companies in the past few years have touted the benefits of leasing residential solar: it seems like a proposition that keeps upfront costs low for those who are interested in benefiting from clean electricity by paying a leasing fee for a solar panel array that belongs to a 3rd party. This article will describe the pros and cons of each for a residential property. There are sound reasons for leasing or setting up a PPA for commercial solar which we will discuss in a future article.
Pros & Cons of Leasing Solar
The concept of leasing solar is fairly simple, and is a valuable alternative to paying a utility company for fossil-fuel-generated electricity. If a solar leasing company evaluates your home and finds it to be a good fit, they purchase, install, and maintain solar panels on top of your home. In exchange, the company charges you a monthly rate for the solar electricity, hopefully less than the same electricity would cost from your local utility company.
The main draw to this option is the fact that you have no major payments at the start of the process. After all, it can be daunting to invest a lot of money into a system, even as solar power becomes more mainstream. However, leasing solar usually means a long-term, 20-year contract with the option to buy the solar system after those 20 years. The monthly payments on leased solar do add up over time and there is no period of time when your electricity is free. Last, there may be a lien on your home and if you decide to sell, the home-buyer will have to assume the terms of the lease.
Benefits of Buying Solar
What you’ll discover with buying solar is that the capital outlay at the beginning of the project is the main downside, and even that may be a smaller problem than one might imagine. Low-interest loans are available for those who don’t have savings that can pay for their solar energy system, which can sometimes be granted with 0% down. Investing in solar as a form of savings is also a stable choice, since these panels will reliably produce power long after reaching your ROI. In addition, a Federal tax credit is available for solar panel systems; it is possible to reduce the cost of a PV system by almost a third with this credit alone (though this tax credit will start tapering off after 2019).
Once you choose the route toward buying your system, you encounter a lot of big benefits: rather than being a purchase that depreciates quickly over time, like a car, solar panel systems tend to add value to homes because they require little or no maintenance and generate electricity for free once they are installed, ensuring steady ROI.
What’s more, premium solar energy systems in the WV, VA, MD and PA area will pay for themselves in 10-12 years, and are expected to be functional for 40 or more years. This results in decades of free electricity, and can improve the home’s attractiveness to buyers as they will have built-in “free” electricity once they purchase the property. Overall, buying solar panels makes money for you while you use clean energy. Leasing, while cheaper and cleaner than traditional electric utilities, makes most of the money for the company that owns your panels.
What’s more, working with a licensed and certified local solar contractor means you know exactly which kinds of solar equipment you are getting; contracts for lease agreements don’t always specify what equipment you are getting. There is a substantially higher chance that you’ll be given less expensive and sometimes lower quality panels and inverters, which can generate appreciably less energy over time.
Another aspect of ownership that appeals to many is the freedom of the solar energy system; once they are paid for, there is no bill or fee associated with their ownership. In the same way that people look forward to no longer having to pay a mortgage when they complete all payments, paying for your solar electricity system can generate a lot of feelings of freedom. Another big perk with owning your system is the ability to add on battery backup whenever you choose.
How to Choose the Solar Solution for You
There are certainly situations in which someone’s assets are tied up in such a way that buying a PV cell system is not in reach right now. However, in many cases, the option of waiting and saving, or seeking a low-interest solar loan, vastly outweighs the option of getting a lease for solar. In fact, if mtvSolar is your contractor the system can be installed in stages as you can afford it rather than all at once.
That being said, there are many other issues to consider when purchasing solar, and getting advice along the way from certified professionals is invaluable. Consider:
– How much viable surface area on your roof or ground do you have for installing solar panels? Most leasing companies do not install on the ground.
– How much power do you need to run your home?
– Are you interested in getting enough solar to zero out your annual utility bill?
– How much direct sunlight do you get per day, and how will it affect your electricity generation?
– Do you want to store electricity so that you have power during an outage?
All of these questions, when carefully considered, can help you not only make a strong decision in purchasing a solar array, but also ensure that you are getting the right size and right price for your needs. While leasing panels requires that an evaluator determine whether your building is a good or not-so-good fit for their program, professionals who are helping you construct a solar array of your own can help you know your options and choose what will make the most sense given the location of your home.
In mtvSolar’s A Tale of 3 Houses short animated video, three hypothetical cases are compared, one where a homeowner chooses traditional utilities for their electricity, and two others who choose to either lease and buy their solar.
Would you like to reduce or even get rid of your utility bill? Please fill out our simple form for a free consultation. Our zero-pressure consultants will assist with all aspects of the process, including showing you creative financing options.