With the increasing adoption of eco-conscious lifestyles, residential solar panels have garnered considerable attention from consumers. However, it can be difficult to answer – is it better to lease or buy solar panels?
The acquisition of solar panels generally necessitates a preliminary capital outlay in the vicinity of $25,000. The precise expenditure on the system will be contingent upon its physical attributes and placement. The process of buying solar panels involves obtaining complete ownership of the system, which allows one to benefit from tax advantages and energy conservation potentially. In such a scenario, you deduct the utility rebate for installing solar panels from the cost of your system before calculating your tax credit.
On the other hand, leasing solar panels involves entering into a contractual arrangement with a provider who is responsible for the system’s installation and upkeep in exchange for a minimal or nonexistent initial payment. The householder remits a fixed monthly charge to the organization that possesses the system.
Solar panels are anticipated to maintain their increasing prominence. In 2023, the Solar Energy Industry Association reported a 43% surge in installations within the United States. However, both leasing and buying solar panels have their advantages. Buying results in long-term cost reductions, while leasing solar panels provides an economical way to enter the renewable energy sector.
This article provides an in-depth look at the costs, benefits, and considerations of both options, ensuring that you have all the information you need to decide how much solar costs and whether to buy solar panels or opt for a solar lease.
By avoiding the obligations of ownership, a solar lease grants homeowners access to the benefits of solar energy. Usually, it operates as follows:
Residential proprietors can benefit from solar energy without assuming the liability of ownership through the use of leased solar panels. In order to comprehend your financial obligation, it is critical, nonetheless, that you thoroughly examine the lease terms.
Source: solarreviews.com
The purchase of solar panels is a simple undertaking that confers full proprietorship of the solar energy system on the householder. It generally operates as follows:
You gain complete control over your energy production, financial incentives, and ownership by buying solar panels.
Criteria | Leasing Solar Panels | Buying Solar Panels |
Ownership | The homeowner does not own leased panels. | Buyers own the panels. |
Upfront costs | Minimal upfront costs. Usually, there is no down payment. | Higher upfront purchase price. |
Tax benefits | Limited tax benefits for homeowners as they don’t own the system. | Potential tax credits and incentives. |
Maintenance responsibility | Often included in the lease agreement. | Maintenance is the homeowner’s responsibility. |
Long-term savings | Generally lower savings over time due to lease payments. | Higher long-term savings as electricity is generated for free. |
Expense | Leasing Solar Panels |
Upfront payment | Minimum payment or no payment |
Monthly lease payments | They are typically fixed for the lease duration |
Maintenance | Often included |
Electricity savings | Moderate as you pay for the lease |
Total cost over the lease period | Usually more than buying in the long term. |
The typical monthly cost of a solar lease is between $50 and $250. Even with interest on the loan for solar energy, you will still pay significantly more than if you had purchased the panels—roughly $40,000—assuming an average monthly payment of $150 and a 25-year lease period.
Expense | Buying Solar Panels |
Upfront payment | Higher initial cost |
Loan payments | If financed |
Maintenance | It is your responsibility |
Electricity savings | Higher, as you own the system |
Total cost over time | Generally less than leasing over the long term |
As of 2022, the typical cost of installing 8-kilowatt solar panels for households was estimated at $3 per watt. At this cost per watt, an 8-kilowatt solar system costs about $24,000, excluding incentives and rebates.
It’s crucial to consider ownership benefits and long-term savings while choosing whether to buy or lease solar panels. To help you make an informed decision, you can use online solar lease vs buy calculators.
These tools take into account factors such as your location, energy usage, available incentives, and financing options to provide a customized comparison. Long-term costs can also be estimated, and savings for leasing and buying allow you to see which option aligns best with your financial goals. Calculators provide valuable insights to inform your decision-making process.
Leasing solar energy offers pros and cons, just like any other purchase option:
Pros | Cons |
Low upfront costs | No ownership or long-term savings |
No maintenance worries | Limited control over the system |
Predictable monthly payments | Potential higher overall cost |
Buying solar panels instead of leasing is the key reason to save money over time. But while buying solar panels, you need to consider the pros and cons that are outlined below:
Pros | Cons |
Ownership and long-term savings | Higher upfront investment |
Potential tax benefits | Responsibility for maintenance |
Full control over the system | Less predictable cash flow |
Source: OptionOneSolar
Comparing the long-term benefits, leasing vs buying solar panels can be a pivotal decision for those looking to harness renewable energy for their homes. When making this critical decision, consider the following factors:
When considering whether to enter into a solar lease or buy a solar panel system, it’s crucial to weigh the long-term financial benefits and ownership advantages associated with each option.
Upon careful evaluation of the leasing solar panels and comparing the advantages and disadvantages, it becomes evident that each option has pros and cons. If you opt to buy solar panels, you make a significant upfront investment, but you gain full control over your energy production, benefit from federal tax credits, and increase the value of your property.
Leasing solar panels comes with less financial burden upfront; maintenance is typically covered by the leasing company, and you can start saving on your energy bills immediately. However, you may miss out on federal tax credits, which might complicate things if you decide to sell your house. Your financial situation, energy needs, and long-term plans should guide your decision between leasing vs buying solar panels.
You may want to consult with a solar energy expert before making a decision. Remember, switching to solar energy, whether you lease or buy, is a big step towards an eco-friendly lifestyle and lowering your carbon footprint.
Solar energy is NATiVE Solar's forte, and they install solar panels for both homes and…
The solar energy experts at Simple Solar LLC provide turnkey solar power systems to homes,…
Renewable resources are the focus of Our World Energy. For companies and homes alike, Our…
Our mission is to satisfy our clients' energy demands and provide the greatest solar system…
All Energy Solar is a Saint Paul, Minnesota-based solar energy firm that offers sustainable energy…
NRG Clean Power is a renewable energy provider that serves business and residential clients around…