The growth of solar power has been immense in recent times. Research by Green Tech Media confirms that a solar photovoltaic system is installed in every four minutes. The growth of solar power makes sense though as the impact of over-exploitation of non-renewable resources has been significant. Global warming, soaring carbon emissions, and air pollution are just the tip of the iceberg.
In contrast, solar panels utilize the sun’s power for energy generation. It is a clean energy source that doesn’t contribute to greenhouse gas emission. However, when it comes to installing solar panels, should you buy them or lease them?
Here is a comparative take on purchasing solar panels vs. leasing:
What’s the difference between buying and leasing solar panels?
Before you dive into the details, the difference between the two options of availing solar panels should be clear to you. The chief distinction lies in the ownership. When you purchase a solar PV system, you get the ownership rights solely.
This applies to upfront cash payment as well as paying loan. The only concern is that in the latter case, the ownership trickles down to you once the loan has been repaid. On the other hand, leasing solar means that a third party owns the solar panel system. Therefore, you don’t get the ownership to yourself.
Besides, a standard leasing contract stretches to about 25 years, so you cannot fully capitalize the complete solar power benefits until then. The cost, terms, maintenance, return on investment, financial offsets all vary depending on the choice you make.
Purchasing Solar panels vs Leasing
Both these options of getting solar panels pose their pros and cons. The main merits of leasing a solar panel include guaranteed performance, instant money saving, and access to subsidies via the solar leasing company in certain instances. The leasing company mostly handles the replacement, repair, and maintenance costs.
On the hand, a purchasing solar panel system boasts the advantage of complete ownership. If you plan to sell your house, you’d be in luck. Buyers instantly repel from paying for homes that require them to take over solar lease payments for the coming years. Thus, buying solar panels boosts your house’s market value. Moreover, you also get to reap the financial benefits of installing a solar panel system.
The cost of a solar power system ranges from $15,000 to $30,000 before incentives and rebates. Cash rebates can slash the total cost by about 50%. Hire skilled professionals like NJ Solar Power Company for installing solar panels.
On the flip side, you can get solar panels for a slim sum of money when you go for solar lease. The only catch is that you are tied to a monthly payment to the owner of the solar panel system. This monthly payment is a cycle that runs for years. As far as eligibility for rebates, tax credits, and incentives are concerned, you do not qualify for them. Those apply to the third party owner of the solar panel system.
You are responsible for paying all the maintenance costs when it comes to purchasing solar panels. You don’t have to worry much in this regard though. Solar equipment tends to be durable, and it comes with warranties, so there are limited costs. Most purchases do not come with an app to keep tabs on the system’s performance.
In the case of leasing solar panels, the maintenance costs of the system come from the pocket of the leasing company. Additionally, you get an app most of the times. It helps to track the system’s performance.
Comparison of Savings and Return on Investment
Purchasing solar panels allows you to save significantly. You can save between 40-70% on electricity costs over the lifetime of the solar panel system. Your property and the incentives offered by your state determine the exact costs of saving. The best part is that you get free electricity for 25-30 years of your solar system’s life.
With the solar panel lease program, you can put aside about 10-30% from the prices paid in utility bills. Again, the exact costs depend upon your property and state incentives.
Comparison of Terms
The contrast of the terms of the two conditions is a no-brainer. If you pay upfront for your solar panel system, you are not bound to any terms. But, if you get a system by availing a loan, then you have to bear with the interest rates. Long-term loans extend to 10-20 years. The interest rates on these lie between 3-8% provided you have 640 or more FICO credit score.
If you opt for solar lease, then you get entangled in terms for about 20-25 years generally. At that point, you can purchase the system or renew your agreement plan.
Summing up, purchasing solar panels are favored over leasing them. However, you can always call the shots based on your needs. The good news is that the cost of solar panels has plummeted by 80% between 2009-2013. These prices are expected to decline as technology costs drop.
Rooftop solar systems that were valued as much as a luxury car are now available at the price of an economy car. Moreover, the ROI on a solar panel system is projected to be from 3-5 years, making it a fruitful investment.