Should you buy or lease your solar panels? It’s a tough decision that can influence your financial situation for years to come. Here we help you understand the comparison of leasing vs buying solar panels.
Should You Buy Or Lease Your Solar Panel System? [An In-Depth Guide]
It’s never been a better time for solar panels, no matter who you are.
For many of us who live in the south or the Midwestern United States, blazing summer temperatures now extend into October.
You may wonder if the summers will continue to get hotter and hotter and how that will affect your health. You also worry about paying $200 to $400 a month electric bills to keep yourself cool.
You might worry about whether your local electric company will keep costs reasonable or whether there will be a huge spike in rates that will drive you to the poor house.
Have questions about going solar energy? Download our FREE printable PDF file that highlights the most important questions to ask about solar energy.
This free guide highlights the following:
- Questions to ask a solar panel salesman
- Items to consider when buying a home with solar installed
- Questions to ask a solar panel installer
It takes 5 seconds to download and get started. You won’t need to decide if you want to lease or buy your solar because we got you covered below to help you make the best decision.
Whatever your reason, solar panels on your home or business are a good option for almost everyone.
Leasing vs Buying Solar Panels
There are excellent solar options for anyone who wants to lower both their carbon footprint and their energy bills. Is it better to buy or lease solar panels?
If you have about $20,000 in the bank, you can usually make an outright purchase of enough solar panels to power your house. But if you don’t have that much cash on hand, there are many other ways you can still enjoy reliable and affordable solar power.
Some solar distributors offer financing options directly. You can also get loans for solar energy through independent financiers. A three to eight percent interest loan can be a good value.
With that interest, you can still repay the loan with all or part of what it would have cost you to pay the electric bill.
A third option that is coming into vogue is to lease solar panels. That means, instead of owning the panels, you can rent them from someone else who then pays to maintain them and make sure they are running efficiently.
One of my favorite ways to switch to clean energy is by using Arcadia Power. You can elect for clean energy either via community solar or by using renewable energy credits.
If you use my link, you will instantly get a $20 credit on your electric bill simply by signing up. There is no cost to do so. Why not give it a try?
Anyone who is looking into solar panels should explore the ins and outs of leasing vs buying solar panels.
The benefits of leasing your solar panels
When you are considering leasing vs buying solar panels, you should consider several factors. Your age, income, and whether you own your own home should all be factored.
In some cases, leasing solar panels does make good sense. For example, if you are already well into your sixties, you may want to lease.
Leasing solar panels don’t tie up large sums of money that you’d like to leave to your children or with which you hope to travel or buy a swimming pool. You certainly don’t want to spend your golden years stressing out about whether a big purchase was worth it.
Check out our solar lifespan guide to understand how long solar panels really last.
Are you rich?
Some people don’t want to be bothered with the many technicalities of solar panel ownership. If you have already made your fortune or you have a trust fund, why would you want to bother getting twenty feet up in the air with a broom and a garden hose or worrying about whether your solar panels are working optimally?
Leasing solar panels can free you up from the details. You can get on with making music, writing books, cooking gourmet meals, teaching, or whatever other noble hobbies occupy your time.
While considering the pros and cons of buying solar, ask yourself how much time you have to spend at your job. If your high-power executive position keeps you at work eighty hours a week, you definitely don’t have time for managing your panels. Just lease them.
Leasing frees you up from having to track the efficiency of your panels. Instead, the company you rent them from will do that, using sophisticated technology that might not be available to you if you buy.
Also, if you lease your panels, you don’t have to worry about carrying insurance on them. That, too, will be the responsibility of the provider.
Furthermore, you won’t have to worry about fixing and maintaining your panels.
If a hail storm wipes out a panel, just call the provider. It’s their responsibility to make sure that the panel gets replaced.
Where does your wife or roommate stand on leasing vs buying solar panels?
When you are debating leasing vs buying solar panels with the rest of your family or roommates, you will have to consider the wishes of the other people in your house.
Are they all on board with sharing the costs and the duties involved in maintenance? If we learned nothing else from Ed Begley, Jr., we do know that you have to scrub down your solar panels from time to time to keep them gleaming. And more importantly, working.
Is there no one in your house who wants to get on a ladder? If that’s the case, leasing solar panels may be a better option than buying.
Similarly, if your wife or husband doesn’t want the financial commitment of a purchase, then leasing solar panels may well be the appropriate compromise.
Do you want to undertake a twenty-year financial commitment with your roommate or roommates? Maybe, if you share core beliefs about your responsibility to lower your carbon footprints.
Quick test: What is your roommate doing right now? Drinking a beer while hanging out in his briefs? You don’t want to sign another contract with that person. Consider leasing.
See Related: Solar Panel Angling by Zip Code (A Full Analysis)
Are you renting? If so, consider leasing so long as your owner approves.
Another key thing to consider when you wonder whether leasing vs buying solar panels is best: Do you own the building?
If you own your own home or the physical location of your business, there are substantial gains to be had by buying your solar panels. However, if you are renting, you will be improving the value of the building–for someone else.
Solar panels can be moved to another address, but it’s a costly and monstrous undertaking. If you never plan to buy your own home, leasing solar panels for the shortest term possible is your better option.
You will, of course, have to get your landlord’s permission to install them. If you live in a high-rise apartment building, it’s not the time to get solar panels.
However, you can certainly pressure the owner to put them on the roof!
But many people rent houses or townhouses. These properties can easily be fitted out with solar panels. If you live in a duplex or triplex, talk to your fellow tenants about sharing the cost of leasing vs buying solar panels.
See Related: How to Clean Your Solar Panels
Benefits of buying solar panels
That said, buying solar panels is the smarter move for most people. In the debate on leasing vs buying solar panels, most people will have to consider the financial aspect.
Here are all the components that go into a solar panel system.
And there is no real doubt that buying solar panels is the wiser investment. Here are some things to consider:
- You are young
- Homeownership vs. renting your home
- You don’t trust your power company
- You are already paying too much just to keep the lights on
If any of the above are major items, buying solar panels could be a better option than leasing.
Young families should definitely buy
If you are still under forty, purchasing solar panels is one of the top two best investments you can make, right alongside buying your own house. And that investment gets even better if you live in a region where you get credit for the extra energy you create.
Even if you have to take out a twenty-year loan (and most young people will need to finance their panels), it will be well worth it over the span of your life.
A young person’s guide to solar panel ownership
If you are ruminating on leasing vs buying solar panels, consider this scenario: You are twenty-seven years old and making $30,000 at your first job out of college. It will take you twenty years to pay off the loan for your solar panels.
But you can pay back that loan, at least in part, with the money you would have to pay for lights, heat, and air-conditioning. (Think you can live without air-conditioning? No, you can’t.)
You may be making the final payment on the solar panels when you are forty-seven. Now, you can take all the money you would otherwise send to the utility company and use that to help your kids pay for college.
As you get older and more sensitive to heat and cold, you will need more energy, but your utility costs will remain stable. The cost of utilities will keep rising, possibly out of proportion to rising salaries, but you will be banking the money you would otherwise have thrown at a heartless corporation.
When you retire, you may have somewhat less money to live on than when you were working. The fact that you are not paying a fifth of your income to a power company will help you live well on a combination of social security and other retirement funds.
Admittedly, buying solar panels involves greater responsibility. You will want to consider how long you plan to live in your current home and the condition of your roof before buying. You will want some system of tracking the efficiency of your panels. Here is a guide to help you decide how to replace your roof with solar panels.
Use our solar roof calculator guide to learn more about what type of load your roof can bear.
Businesses should definitely buy
The benefits of buying a solar array big enough to power your business are nearly endless. If you are powering a big warehouse space, you will not just save hundreds of dollars a year, but potentially tens of thousands by installing solar, just in energy costs.
Then, there are also tax depreciation considerations. Depending on where your business is located, you can defray the cost of solar installation against your profit. Some districts will let you depreciate your solar panels over just one year, which is a huge boon to businesses that make a lot of money their first year.
Alternatively, you can depreciate your panels over five or ten years. That way, you spread out your tax advantage over a longer span of your business’s life.
As a business, you may have enough scale on an adjacent lot of land or the rooftop of your property to actually make money from your solar power.
Need to know how much solar you need to size? Read our guide on how much energy a solar panel produces.
Additionally, you can use our solar return on investment calculator to determine your return and payback from installing solar.
Buying is the best option for a starter home
Thanks to millennials, the real estate term, “starter home” may go away in the next few years. But some people do still buy houses that they plan to live in, only until they can afford a bigger, nicer house, in a more prestigious zip code.
While you are analyzing the pros and cons of leasing vs buying solar panels, you will want to consider how long you intend to live in your current home.
Should you buy solar panels for your starter home? The answer is a tentative “yes,” especially if you are going to keep this house for at least five years.
Make sure the company from which you buy your panels is willing and able to move them to a new location.
Obtain the cost of doing that, preferably in writing. And read your warranty to make sure that it isn’t void if the panels are moved. Here is a guide on how to test a solar panel.
You add value to a home when buying solar panels
When you buy your dream house and put the starter home on the market, you will learn that home buyers no longer look at solar panels as a strange new thing. Solar energy adds value to a house, especially if you show your buyer’s energy bills with a zero balance or even a credit.
In regions with high energy costs, like California, buyers will line up to buy a house with solar energy.
Worst-case scenario: You don’t find a buyer who wants your house WITH the panels. You then move the panels to your dream house, rather than buying new ones.
By contrast, leasing panels for your starter home is not a good idea. You might not want to go through the headache of transferring the lease to the new owners.
Solar leases have been known to scare buyers off.
Buying solar panels walks your talk
Buying solar panels isn’t just a great lifetime investment. It’s also the best thing you can do for the environment. Studies have shown that your neighbors are more likely to get solar panels if you get them first.
Having solar panels on your house sets a good example to the neighborhood and starts a conversation about clean, green power.
You never know, you might end up on a block with five other solar paneled roofs.
If you opt for buying solar panels, consider these top solar panels to use.
Related Guides to Buying Solar Panels
- Monocrystalline vs Polycrystalline: What’s the Difference?
- Best Batteries for Solar Panels
- Top Rated Solar Panel Monitoring Systems
- Best Solar Charge Controllers
Conclusion on Leasing vs Buying Solar Panels
In conclusion, leasing solar panels makes solar energy available to more people than ever. And while buying is still the better long-term investment, leasing solar panels is a good alternative to buying for many people and in many circumstances.
Whether you lease or buy, solar panels are a good overall idea. By solarizing your home or business, you are supporting the growth of the solar industry That’s a good way to vote against climate change with your dollars and a good way to vote FOR the health of the planet we all have to preserve and share.
Are you going to lease or buy your solar panels? Let us know in the comments below. We’d love to hear from you.
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Green Coast is a renewable energy and green living community focused on helping others live a better, more sustainable life. We believe that energy and green living has become far too complex, so we created a number of different guides to build a sustainable foundation for our future.