The primary difference between buying or leasing a solar PV system is around ownership. Ownership is significant because you can take advantage of the federal tax credit, and an increase in equity to your home. A lease allows you to take advantage of immediate savings with $0 upfront costs. You also don’t have to worry about the hassles that can come with owning a system since someone else is guaranteeing that your panels are running efficiently.
Therefore, the primary question comes down to, are you looking to maximize your ROI (return on investment), or would an additional $30/mo in your pocket make a difference? If you’re looking to maximize your ROI, owning the system is the way to go. It now depends on whether you want to purchase it outright or purchase it through financing. If you are looking to capture immediate savings, getting a PPA / Lease allows you to pay $0 down and immediately start saving 30 – 50% per month on your electricity bill.
Quick Tip: If you buy a solar energy system, either outright or after repaying your solar loan, the most crucial difference is that you own the solar energy system. If you lease the solar energy system or sign a power purchase agreement (PPA), a third party owns the solar panel system.
Just like with a car, the choice between buying and leasing is a tough call, but in both scenarios, you will save money. By adding a solar energy system to your home or commercial building, you can:
Quick Tip: For those looking to maximize their ROI
Quick Tip: (Commercial Property Owners) Could potentially further maximize their ROI by taking advantage of tax benefits by categorizing the solar panel system as a depreciable asset. We recommend that they always check with their professional tax consultant first to ensure they qualify and that it matches their goals.
Quick Tip: For those looking for immediate savings with no upfront costs.
Buying | Leasing | |
Ownership | You own the solar PV system and get to keep it as long as you want. | You don’t own the solar PV system. You get to take advantage of the benefits but must either return it or purchase it at the end of your lease. |
Up-Front Costs | Typically a $1,000 initial deposit as a down payment. | Varies on the. type of lease but $0 down payment options are available. |
Monthly Payments | Loan payments are typically higher than lease payments since you’re paying off the entire purchase of the solar energy system plus interest and other finance charges. | Lease monthly payments are almost always lower than loan payments. It should also be a lower monthly payment to pay for your electricity than from your utility company. |
Future Value | The solar PV system will depreciate, but its cash value is yours to use as you’d like, and it will increase the equity of your home by an average of 34%. | The future value doesn’t affect you financially, but you also don’t get any benefits around improve home equity or a federal and state tax credit. |
Early Termination (e.g. moving) | You own it. You can sell or get rid of your system at any time. | Typically 100% transferrable. After 5 years of leasing, you typically have the option to purchase the system if you’d like. |
End-of-Term | N/A | Most leases are 100% transferrable. |
Adding a Solar Battery System | You can add a solar battery system at any time. | It depends on the leasing company, whether they will allow for a solar battery storage system to be added in the future. |
Performance Maintenance | The homeowner should do periodic checks to ensure that their system is performing. | With leases, the performance of the system is monitored and guaranteed by the leasing company. |
As you go through the solar installation process, there are a few differences that you will experience whether or not you decide to buy or lease. It can impact everything from the overall cost of going solar to the maintenance of the system after your solar energy system is operational.
Going solar has never been easier, but one of the hardest questions to answer is deciding whether you want to own or lease your system. Every person’s situation is different, and what is best for your property depends on a wide range of factors. Forme Solar, is proud to be a beginner’s guide to going solar, and you can be assured that we can help you walk through the full range of factors that will determine whether or not owning or leasing the system makes the most sense for your home or commercial property.