By now, most homeowners know that solar installations come at a pretty high price. And while buying your solar energy system gives the best return on investment, not everyone has the cash to cover the upfront costs. Luckily, other financing options such as solar leases and PPAs can help make the switch to solar more affordable. But that begs the question — should I buy or lease my solar panel system? Today, we’ll tackle these two options to help homeowners figure out how they can finance their solar power systems.
Leasing Solar Panels
Solar panel leasing is by far one of the most widespread methods of installing solar panels. It involves a 20- to 25-year contract that allows a contractor to install solar panels on your property without having to actually pay for them. As a result, solar leasing is an incredibly affordable and approachable solar financing option.
Although there is usually no upfront price, you’ll have to pay monthly installments to use the generated electricity. However, the price is often much lower than a regular electricity bill. Depending on your contractor, it might also not be subject to price surges. And, at the end of the leasing period, you can either extend the agreement, purchase the solar energy system, or request its removal.
Unfortunately, since you’re not the actual owner of the solar energy system, you won’t be able to take advantage of incentives and rebates. Additionally, leasing can decrease the long-term value of your home. That’s because people looking to buy a house will have to qualify for and pay for the solar lease, which can last for up to 25 years, depending on how much you’ve managed to pay off.
Power Purchase Agreements
Apart from regular solar leasing, homeowners can also opt for a Power Purchase Agreement. With a PPA, people can install solar panels that are owned by another company without actually paying for them. Instead, they’ll have to buy the electricity they use just like with a regular energy bill.
It’s worth noting that PPAs used to feature an increasing rate payment model, which scaled based on industry prices. But currently, you only have to pay for the amount of energy you consume at a fixed rate with no hidden fees. And, just like with solar leases, you can either extend the contract or purchase the solar energy system when the PPA expires.
Buying Solar Panels
It’s true that paying upfront for a solar energy system can be quite a formidable obstacle for many homeowners. In fact, it might even deter people from switching to solar energy. However, the pros heavily outweigh the cons.
For instance, by purchasing a solar system, you can gain energy independence. Not only will this lower your utility bill or outright eliminate it, but it will also allow you to operate during grid overloads or blackouts. Plus, you can even take advantage of net metering, a program through which you can sell excess energy back to the local grid in exchange for financial benefits. And, by installing solar panels, you automatically increase the value of your home.
It’s important to mention that, nowadays, many incentives and rebates, such as the Federal Tax Credit, can reduce the initial cost of solar energy systems. Thus, you should look into any local programs before you sign a lease contract or purchase your own panels.
Leasing or Buying Solar Panels — Which One is Better?
Switching to solar energy has never been easier or more accessible. As a matter of fact, with financing options like leasing and PPAs, everybody can now afford solar energy. Sure, you’ll have to pay monthly for solar energy. But the price will surely be much lower than that of regular utility bills.
However, we still believe that upfront payments offer the best return on investment. They also boost your home’s value, which can prove beneficial if you ever plan to sell your property. Thanks to financial incentives and rebates, you can easily cover a significant part of the initial investment.
So, our recommendation is to take your time and consider all the benefits of both financing options in order to make an informed decision for your home and family! If you need any more help, don’t hesitate to contact Atlantic Key Energy!