If you’re looking to reduce energy bills or go green, solar is an attractive option. Before making a final decision, however, be sure to weigh the advantages and drawbacks of both purchasing and leasing solar panels.
Leasing offers homeowners the advantage of both money-saving and environmental responsibility, giving them the chance to experience solar before buying.
1. Lower Upfront Costs
When it comes to upfront costs of installing solar panels, leasing can be an attractive option. The leasing company covers the full cost of the system and you only pay a fixed monthly fee for any energy produced by your leased panels.
However, leasing does not always offer the same savings over time as purchasing a system. Furthermore, most leases contain an escalation clause which could raise your monthly payments in the long run.
Comparatively, if you purchase your solar system outright or through a loan, you own it and will enjoy savings on electricity bills for 25 to 40 years – far superior to any short-term benefits associated with leasing.
Furthermore, when you purchase your solar panel system outright, it adds value to your home. This increases the likelihood that you’ll sell your house at a higher price point.
2. No Down Payment for Solar Panels
Leasing solar panels is a popular option because it requires homeowners to invest less upfront. However, the lifetime savings compared to purchasing solar panels is much smaller.
Additionally, it does not add any value to your home and does not qualify you for money-saving incentives such as the 30% federal tax credit and local rebates that may be available in your area.
Additionally, a lease can have an adverse effect when selling your house. The buyer will have to assume the obligations under the lease, which could create complications if they don’t qualify for it in the first place.
Instead of leasing, many homeowners opt to finance their solar panels with a loan. They can either take out a personal loan, take out a home equity loan or line of credit to cover the cost of installing their system.
3. No Tax Incentives
To take advantage of the tax benefits associated with a solar system, you must own it. This could either mean buying outright or financing through a loan (such as with Mosaic platform).
Homeowners who lease solar panels do not qualify for tax incentives like the federal 26% investment tax credit, which is guaranteed until 2022 and available only when you own the system. This credit provides a major incentive for those considering going solar, so it should be claimed as soon as possible.
When purchasing your solar system, you can take advantage of the 30% Residential Clean Energy Credit that is guaranteed until 2022. This tax credit, based on a flat 30% base rate, offers an impressive incentive that should help reduce carbon emissions and move us towards electrifying all our homes’ energy requirements.
4. No Ownership Solar Panels
Leasing solar panels is an attractive solution for customers seeking to save money on their electric bill. It’s also an efficient way to get involved in the renewable energy movement while contributing to environmental protection. But it’s essential that customers make an informed decision when selecting their system.
One of the most common mistakes people make when considering solar powered homes is to enter into a lease without thoroughly weighing the advantages. There are various factors to take into account, such as quality of equipment and panel size. According to Vikram Aggarwal, CEO of EnergySage online solar marketplace, selecting the right company for installation can make or break the experience.
To determine which solar company is the most reliable in your region, do some comparison shopping and request quotes from three or more reputable firms. This will enable you to identify which of the many solar providers is truly leading the charge in your area. It is most essential that you select a company that will give an honest and timely estimate for the size system required.