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Leasing vs Buying Solar Panels Or Batteries – Which is Best For You?

June 27, 2024
8 min read

If you’re considering switching to solar energy, you generally have two options: you can lease a solar system or buy your own. The main difference between these two options is ownership: 

  • When you purchase a solar battery or solar panels, either through cash or solar loans, you own the entire system outright. 
  • When you lease a solar or battery system, you pay little to no upfront cost for installation, but you will pay a monthly fee to to access and use the system. In short, you get to take advantage of solar energy and save money on energy bills, but you do not own the solar system itself. 

Both of these are good choices that have their own pros and cons depending on your circumstances and priorities. To help you make an informed decision, we compare leasing vs buying solar panels so you can find out which option is best for you. 

Key takeaways:

  • Leasing solar systems allows homeowners to go solar without having to invest money upfront. 
  • Buying solar panels generally costs more upfront but often offers the best long-term savings and return on investment. When you own the system, you are also eligible for tax credits and other incentives which can offset some of the costs involved.
  • People who lease solar systems don’t qualify for solar incentives and tax credits, and they might end up paying more overall. 
  • Leasing solar panels can be the best option if you don’t have the cash upfront, don’t qualify for tax incentives, or are unable to secure a solar loan with a reasonable interest rate or not at all. 

Leasing a solar system

Solar leasing is when you pay a fixed monthly fee in exchange for having a solar energy system installed on your property. Unlike buying a solar system outright, when you lease a solar system the leasing company retains ownership of the solar panels and other related equipment. 

Leasing a solar system allows you to benefit from using solar energy and saving on utility bills without having to invest in solar panels yourself. To help you understand whether solar leasing is right for you, let’s look at the pros and cons. 

Pros of leasing a solar energy system

The benefits of solar leasing include minimal upfront costs, no maintenance cost, predictable monthly payments, and no payback periods. Let’s look at each of these points in more detail. 

Minimal upfront costs

One of the most significant advantages of leasing a solar or battery system is that it comes with little to no upfront investment. In fact, most leases are $0-down agreements. This means you can get solar panels up and running with minimal start-up cost.

Of course, you’ll still be making payments throughout the term of the lease (usually fixed monthly payments), but this can be more manageable for some homeowners who can’t or don’t want to make a large upfront investment. 

Maintenance is included

Solar panels and batteries are generally low-maintenance, but occasional upkeep may be needed. With a solar lease, the leasing company—not you—is responsible for maintenance and repairs throughout the lease term. In many cases, this coverage lasts longer than the manufacturer’s warranty, effectively extending your protection well beyond standard coverage.

No payback periods

Leasing solar panels lets you start saving on utility bills right away, with no wait for a payback period. Buying panels requires an upfront investment, but once it’s paid off, every dollar you save is yours to keep.

Predictable payments

Most lease agreements offer fixed monthly payments for the duration of the lease term. This provides a degree of financial predictability that can make it easier to budget energy expenses without worrying about fluctuating electricity prices. 

Performance warranty

Some leasing companies provide a performance warranty that guarantees your solar panels will generate a certain amount of electricity over time. Because solar cells can sometimes degrade as the years go by, this provides reassurance that your panels will continue to operate efficiently into the future. 

Buyout and eventual ownership

Many solar leases include a buyout option after a set period, often based on fair market value. This lets homeowners assume full ownership, which can simplify a home sale since the system transfers with the property rather than requiring a lease transfer. Ownership also makes it easier to add upgrades later, such as batteries or additional panels.

Cons of leasing a solar energy system

While solar leasing has many benefits, it can also come with its own set of drawbacks that may not make it viable for some homeowners. We look at the cons of solar leasing below.

You won’t be eligible for rebates or incentives

One key drawback of leasing solar panels is that you can’t claim government or private rebates since you don’t own the system. Depending on your location, these incentives can help to offset the cost of a solar panel or battery purchase. A reputable local installer can guide you through available incentives and help compare the advantages of leasing versus owning.

You might end up paying more over time

Leasing solar panels requires little to no upfront cost, but over time you may pay more than if you bought a system outright. Lease payments add up across the term and can eventually exceed the cost of ownership.

That said, lease payments are designed to be lower than your utility bill. Since you’ll be paying for power either way, as long as your lease costs less than utility rates—which you’ll know upfront—you’ll still come out ahead.

Leases are more complicated if you sell your home

Lease agreements usually come with long-term commitments, often spanning 20 years or more. This can make things complicated and costly if you choose to move or sell your home during that period. Ending a solar lease agreement early can be difficult, so your three best options are: 

  • Buying the panels: Some leases include a buyout option, either at fair market value or under early buyout terms. This lets you assume ownership and makes transferring the system to a new homeowner much easier. The tradeoff is the added cost of the buyout.
  • Moving the solar panels: Most leasing companies don’t allow solar systems to be moved to a new home. Every house has a unique roof layout, sun exposure, and energy usage profile, so a system designed for one property may not perform properly on another. Instead, leases are typically transferred to the new homeowner or, in some cases, bought out before the home is sold.
  • Transfer the lease: You may be able to transfer the remainder of your lease to a new homeowner. Of course, this depends on whether the leasing company allows it and the new homeowner is interested in assuming the lease terms, and can qualify for the payment. 

Limits on system additions

When you lease a solar system, you typically can’t make modifications—like adding a battery or extra panels if your energy needs grow. This limits your long-term control over the system’s design and performance.

Buying a solar system

Buying a solar system means you own the panels and equipment outright. While it requires an upfront investment, ownership gives you long-term savings, access to tax credits and incentives, higher property value, easier system expansion, and simpler transfer if you sell your home.

To see if buying a solar system is a better option for you, let’s look at the pros and cons. 

Pros of buying a solar system

The benefits of buying your own solar panel system includes being eligible for tax incentives and rebates, increasing the value of your property, and long-term financial returns. Let’s look at each of these benefits in more detail. 

Eligibility for tax incentives 

Owning a solar system lets you take full advantage of tax credits and other incentives. These programs can help offset the initial cost of installing solar panels and make them more financially viable for those who prefer to own their solar and battery systems outright. 

You can read more about how federal solar tax credits work on the Office of Energy Efficiency and Renewable Energy website.

You will add value to your home

Owning a solar system has been shown to increase your property’s market value. According to a study by Zillow, solar panels can increase the value of a home by 4.1% on average, depending on where you live and the strength of your solar market. Another study by the US Department of Energy's Lawrence Berkeley National Laboratory (Berkeley Lab) similarly found that homebuyers were willing to pay an extra $15,000 or more for a home powered by solar energy. A leased system does not impact property value. 

More control over your solar system

Owning your solar system gives you the flexibility to upgrade or expand as your energy needs change—a major advantage over a decades-long lease. Whether you add a hot tub, pool, electric vehicle, or even an addition to your home, it’s much easier to upsize your system when you own it. For example, you can add more panels or install a solar battery without lease restrictions.

Cons of buying a solar system

It’s clear that buying your own solar system has numerous benefits for homeowners. But as with anything, there can be some drawbacks too. Let’s look at the cons of buying your own solar system. 

You’ll have to make an upfront investment

Buying solar panels is an investment in long-term savings and sustainability. If covering the full cost upfront isn’t feasible, solar loans make ownership accessible with manageable monthly payments. While loans include interest, they still let you enjoy the benefits of ownership—like tax credits, incentives, and higher home value—without the barrier of a large upfront payment.

You’re responsible for maintenance

When you own a solar system, you’re responsible for maintenance and repairs. Fortunately, panels and batteries are very low-maintenance, and most major components are covered under manufacturer warranties. However, certain costs—like diagnostic fees, which are rarely included—may fall to the homeowner.

Financial implications

For many homeowners, the decision whether to buy or lease solar panels rests on their financial situation and long-term goals: 

  • Leased solar offers immediate savings but less long-term flexibility. 
  • Buying solar is initially more expensive but offers a much greater degree of expandability and smoother transfer if you sell your home.

Leasing vs buying solar panels

Ultimately, both leasing and buying solar panels have their advantages and disadvantages depending on your priorities and goals. Below, we compare the difference between leased and owned solar systems. 

 

LEASING SOLAR

BUYING SOLAR

Ownership

You don’t own the solar system.

You own the entire solar system.

Costs

There are little to no upfront costs, but you pay a monthly fee to access the solar panels. Over time, you may end up paying more than it costs to buy a solar system.

Upfront costs can be significant, but you’ll benefit from long-term cost savings.

Maintenance & repairs

In most cases, you’re not responsible for maintenance and repairs.

You are responsible for any maintenance and repairs that fall outside the manufacturer's warranty or the installer's workmanship warranty.

Control

You have limited control over the solar system and cannot make modifications or upgrades.

You’re free to upgrade or modify the solar system as you choose.

Financial benefits

You are not eligible for financial incentives like tax credits and rebates, but you’re still likely to save on energy bills.

You are eligible for tax credits and rebates while also saving on energy bills. 

 

Summary: Should you lease or buy solar panels?

Switching to solar power without having to invest money can be tempting, and for some people, it’s the only way they can make the switch. But if you have the ability to invest in buying solar, then doing so will offer far more long-term benefits and returns. 

Leasing solar might be best for you if: 

  • You want to start generating solar energy immediately
  • You want to help the environment without investing too much money at once
  • You’re unable to secure a solar loan
  • You don’t qualify for tax credits and rebates.

Buying solar might be best for you if:

  • You have the money to invest in solar systems
  • You plan to stay in your home for the next few decades
  • You qualify for tax credits and rebates
  • You don’t mind upfront costs if it means long-term returns.

If you’re still unsure which option is best for you, a reputable solar installer can guide you through these choices and make the decision easier. Don’t hesitate to reach out to the friendly team at Sun Valley Solar Solutions to discuss your options. 

As one of Arizona's top solar installation companies trusted by over 10,000 homeowners and countless businesses, we can help you settle on a decision that meets your financial goals and abilities. Contact our team now for a free quote or to explore solar financing options.

 

Lease or Buy: FAQs You Should Know

About the Author

Ryan Saffarini CTO