Pros and Cons of Leasing Solar Panels

What is a Solar Panel Lease?

For example, leasing solar panels functions in such a way that you do not buy the panels directly — instead, you sign a contract with the company under which they install and maintain the whole system on your property for a certain term. You pay rent each month or for the power produced by the system in return. There are generally 2 broad categories of solar leasing options 
fall under.

You will not be entering into a PPA but instead, you’ll sign an SLA — A Solar Lease Agreement that says the solar panel generator mon thereon your roof is going on demand each month and You pay them a flat rate for all time slots they activate their electricity to specific energy device within or just outside of your family unit.

Power Purchase Agreement (PPA) — You pay a predetermined rate per kWh from 15–25% below the utility rates on your usage.
Both offerings allow you to take advantage of solar energy without paying installation costs upfront. 

Advantages of leasing solar panels

1. Lower Upfront Costs
By far one of the biggest advantages of leasing solar panels is that it allows you to avoid some significant up-front expenses. Solar installs range in price from $10,000 to the low end up to over $30 grand for larger jobs, depending on where you live. This is a major deterrent for many homeowners. Solar leasing makes it much more affordable to go solar, as you do not have to pay for the entire system upfront.

2. No Maintenance Worries
Solar Panel Leasing –If you lease solar panels, the respective leasing company must maintain your system. So if the panels, inverters, or any other part of your system fail, the company will be responsible for repairing them.

3. Quick Energy Savings in Your Utility Bill

Even more exciting for some, leasing solar panels means you start saving money on your electricity bills immediately. Most leasing agreements include a lower energy rate than the local utility price, so homeowners are paying less per kilowatt-hour (kWh) with solar panels on their roofs. Over time, this translates to savings that can accumulate, particularly in locations with expensive electricity.

4. No Worries About Installation

They install it, have the permit for it & inspect it. This way, you no longer have to face complex installations or deal with your local authorities. The post This Solar Franchise Could Be a Boon for Working Families (or People Who Just Don’t Want to Install Panels) appeared first on Real Estate News…

5. Solar Tax Credits

You may not own the solar panels, but as with borrowing programs, leasing companies can benefit from federal or state/local incentives like tax credits and rebates. While it may sound like homeowners miss out on a nice incentive here, the good news is that leasing companies often do deliver some of these savings to you through lower lease rates, which means solar becomes even cheaper for everyone.

6. Flexibility in Contract Terms
Leases are usually 10–25 years long, allowing homeowners to choose the term that works best for them. Leasing agreements also frequently provide homeowners the opportunity to purchase the system at fair market value or at a significantly reduced price once their lease is up, should they desire ultimate ownership of the panels.

Cons of Leasing Solar Panels

1. Long-Term Costs
Leasing solar panels, however, takes the big initial outlay off your plate today; still, you will likely spend more over time compared with buying a system upfront. Those monthly payments can eventually exceed the price of a solar system once bought outright over an amortized loan with a 20- to 25-year term. Moreover, a yearly escalation clause can be included in some leasing agreements, which implies that the monthly payment will increase over time. That can drive the savings you garner on electricity bills down considerably.

2. Lack of Ownership
If you are leasing panels, then the system is not yours. Now that is a downside for homeowners looking to adopt solar who want full ownership over their system, which, of course, would give them greater financial gains in the long run. As you are not the owner of the land, there will also be limitations on what programs and incentives you can qualify for — e.g., would a power purchase agreement allow them to take advantage of ITC benefits?

3. Missed Long-Term Savings
Once your system is paid off, you now have decades of free electricity. But with solar-panel leases, monthly payments last the life of the lease — 20 years or more — , so your savings are limited. When the lease is up, you lose out on some of those savings from system ownership, though — at least if you buy/keep the system at end-of-lease.

4. Fewer Energy Savings Possible
Leasing solar panels may provide cheaper energy rates than you would get from your local utility, but the savings will likely be smaller compared to owning a system outright. The reason for this is that the rental company will include its profits when calculating your monthly earnings.

What To Consider Before Leasing Solar Panels

1. Your Energy Needs
Leasing vs Owning Before you decide to go with Leased Solar Panels, please take these few words into account: What do I need now, and what did my home use-wise in the past? If you consume a lot of electricity or anticipate increased usage down the road, owning may be the right choice for maximizing long-term savings. Leasing also might be a better idea if your power needs are on the low end, or they tend to stay pretty constant.

2. Length of Time in Your Home
If you anticipate moving in the next few years, then leasing solar panels is probably not your best option. Assuming the lease to a buyer is difficult, and buying out of leases can be expensive. But on the other hand, if you are to be in your abode for decades, then leasing could take a long time.

3. Local Solar Incentives
Laws and Incentives Energy.gov Find solar energy incentives in your state Image_DOE Copyright 2015. energy. These may be in the form of tax credits, rebates, or performance incentives. Those who own their solar typically stand to gain the most from these programs, so leasing may not get you access to all of those incentives.

4. Future Electricity Rates
Electricity prices can be more than the average rate increases over time, so calculate to compare how much less your energy bills will increase by going solar. While leasing solar panels can generate short-term savings, purchasing the system outright additionally protects against long-term increasing electricity rates.

Conclusion

First, solar panel leasing appeals to homeowners who want the benefits of solar power without buying a system outright and installing it themselves. You gain reduced electricity bills and the leasing company can take care of all setup, maintenance, and repairs. But what are the trade-offs, including a potentially higher long-term cost and not owning your system or dealing with issues when you sell your house?

Whether leasing or buying solar panels is right depends on your circumstances, how long you will be in the house and what energy requirements you have. Read your lease agreement carefully before you sign, including escalation clauses, to see how costs balloon over time compared with the cost of outright purchasing a solar system. By understanding its pros and cons in a comprehensive manner, you can take an informed call before you decide to go solar.