Now that you decided to be environmentally friendly and preserve our planet by going solar, it is time to take action. However, I can imagine what can possibly slow you down. You are having a hard time deciding on what is right for you: buying solar panels or leasing them. Don’t worry! The answers that you want to find are in this article. I can help inform so you to make an informed lease or purchase decision
Buying solar panels outright requires a larger capital investment but it pays off in the long run as you will immediately receive returns on your investment. Leasing a solar a solar panel system is more economical because and less hectic. You should decide which option is best for you after considering your situation and weighing all the pros and cons.
Let’s start by exploring pros and cons of both buying and leasing solar panels.
1 Pros and Cons of buying Solar Panels
Pros of Buying Solar Panels
Return on Investment
If you buy solar panels cash, you will get more savings and return. It depends on your state’s property and the incentives, you usually save more than half of electricity bills with the lifespan of your solar panels. Also you can pay solar panels itself around five to seven years. Rest of the lifetime of solar panels you can get bigger return.
Freedom of choice
You will have more flexibility of choice to solar panels. If you lease solar panels from the company, they will decide almost everything about what to put on your roof, although if you buy solar panels, you can decide the size you want to put on your roof, and you will be able to choose the type of inverter.
Another advantage of buying solar panels is that it could increase your house value. The report titled “Appraising into the Sun: Six-State Solar Home Paired-Sales Analysis,” showed that buyers were willing to pay $15,000 more for home with the 3.6 kilowatts of solar panel system, or about four additional dollars per watt of solar power.
Cons of Buying Solar Panels
You always need to pay to buy something, therefore it requires upfront costs
Another disadvantage is that you have to take care of solar panels. Which means that you are responsible for maintenance. Although when you buy solar panels, most of it has the maintenance included. You don’t have to worry about it that much.
2 Pros and cons of leasing solar panels
You will rent and have a contract with the solar company, instead of paying a lot of money to have your solar system, you can get all the benefit from the solar system and just need to pay less in every month.
1 Save for your power bill
Since you are using the solar system for your home electricity, not only you can create your own power but you will receive the credit from the grid and save your cost on the utility.
2 Don’t need to have substantial cash
You don’t own the solar panels; therefore, you don’t have to prepare a lot of cash to pay the large capital of the solar system. You just pay monthly to the leasing company.
3 Don’t need to worry about the equipment failure
It usually can lease for 15 to 25 years, during the leasing period, the solar company owns the panels and typically responsible for maintenance. Therefore, you don’t need to have to worry about all the problem about the failure of the system and the maintenance.
1 Have a long time contract
You will usually face a 15-25 years contract, which will make you tied to pay monthly for solar panels for a long time. If you want to stop the agreement, you need to pay the penalty fee.
2 Make difficult for you to sell a property/ No house value increase
Usually, the agreement will require you that if you are selling the property during the contract, you will either buy out the lease, or your buyer will need to take over your solar lease.
However, not every house buyer wants to have a solar system or they may have the ability to have their own solar system, so your solar leasing may cause problems for you and your potential buyers. And because of the homeowner doesn’t have the ownership for the solar system, it can not help you to increase your house value in the market. For those reasons, that’s why makes you sell your house even harder.
Can not get credit for your taxation Since you are leasing the solar panels, you can not claim for the federal income tax credit and has no interest deduction on your future income tax returns. Also, you will miss the local incentives.
3 What situations make you decide to buy or to lease solar panels
Situations that make you decide to buy solar panels:
1 You are interested in long-term savings and liquidating your monthly electricity bills.
2 Increasing home value is one of your priorities. According to the study conducted by the Lawrence Berkeley National Laboratory in California (2002-2013) buyers are prone to pay complementary $15,000 for a home with a solar photovoltaic (PV) system.
3 Tax burden reducement via state or federal tax credits and other tax opportunities are the things that can brighten your financial life.
4 You are someone who takes pleasure in being immersed in a project and taking responsibility for financial incentives, maintenance, and hypothetical repairs.
5 Lots of payment methods are available to you: cash, home equity loan and solar loan. In fact, you can buy a PV system with an interest-free loan.
6 You are someone who likes guaranteed return on investment.
7 Once you made your purchase, solar panels belong to you forever until you decide to sell your PV system or your house.
Situations that make you decide to lease solar panels:
1 You have little or no income tax liability – you don’t have a tax debt or it is very little. As is known if you buy solar panels you can obtain 30 % off the total cost of your system via the investment tax credit (ITC). If buying solar panels does not serve to reduce your tax, then there are no real savings involved.
2 You prefer to avoid a bustle of ownership. You don’t like being responsible for maintenance, repairs etc. You would rather opt for a hassle-free process.
3 You are looking for an economical way to go solar and you want to make use of energy savings with a little or no first installment.
4 Below you can see the difference between the lease and a Power Purchase Agreement.
The lease of solar panels
- You pay a fixed monthly fee
- When the lease ends, you can buy the panels
- You are not responsible for any installation, maintenance or repairs that might be needed
- The lease lasts 20 years.
A Power Purchase Agreement
- You pay for the electricity delivered by solar panels each month. The price may vary depending on the amount of produced energy. Electricity during the summer months typically will cost you more money.
I have told you about both situations (buying and leasing), now it is your turn to make a decision. Take your time, evaluate pros and cons, and don’t forget that whatever you choose, you will support clean energy and a healthy planet. Good luck!
- You are not responsible for any installation, financial incentives, maintenance or repairs that might be needed.
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