In the last decade, residential solar panel installation has increased 35-fold and generates enough electricity to power 12-million homes in the United States. By choosing this clean, renewable energy source, homeowners protect the environment. They also lower their energy bills by up to $20,000 over the life of the solar panel system.
People who research adding solar panels to their home discover several options, including solar loans and solar leasing. While some homeowners opt to purchase a system outright, others choose leasing solar panels.
This article will explain the difference between leasing vs. buying solar panels and whether a solar lease is right for you.
What is Solar Leasing?
The cost to purchase a solar panel system for your home varies by the type of panels you buy, the area of the country in which you live, and the number of tax credits available to you. In most cases, a 10kW solar system will set you back approximately $30,000.
People who purchase a system outright will realize enough savings to pay for it after about seven years. But the upfront expense is often more than some people can afford. There are loan options for solar panels, or you can use a home equity loan to cover the cost.
So how does a solar lease work? With a solar lease, you avoid the upfront costs of the system and pay a monthly fee to the leasing company. Your utility bill should decrease right away, and the combined cost of the lease and your utility bill should be less than you paid before.
Leasing Vs. Buying
With a solar lease, you realize the savings on your utilities without the cost of paying for the whole system at once. Your lease term is usually 20-25 years, and at the end of the lease, you can renew the lease or have the panels removed. With a lease, the leasing company takes care of any maintenance issues that might arise during the lease term.
Pay attention to the fine details of your lease agreement. Your leasing payments could increase over time. You don’t own the panels, so if you sell your home, the new owner will have to agree to take over the solar lease. Alternatively, you can decide to pay for the removal of the panels.
Solar panel lease cost is much lower upfront, and leasing can be a good option for people who are convinced they are not moving for a long time. You’ll see immediate savings on your utility bill, but you are not eligible for any tax credits.
Homeowners who choose to buy solar panels and home solar installation add value to their homes. They realize larger cost savings over time, and they are eligible for tax credits that offset the purchase price. The only real downside of owning the system is you are responsible for all maintenance costs.
Making the Right Choice
Adding solar panels to your home will lower your energy costs. Some people generate excess power that is purchased from them by the local utility company. Choosing to buy your solar system or using a solar leasing program is a big decision.
A lease usually requires no money down, and you aren’t responsible for maintaining the system. But you don’t own the panels, and you aren’t eligible for any tax credits. Purchasing a system provides more significant savings over time and more flexibility for the homeowner.
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