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:
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:
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.
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.
One of the most significant advantages of leasing a solar 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.
While solar panels are generally low-maintenance, they may require upkeep from time to time. If you have a solar lease, you won’t have to worry about maintaining and repairing the solar system as it would be the leasing company’s responsibility. This means all you’ll have to do is clean the panels occasionally.
When you lease solar panels, you can start saving on monthly utility bills immediately - without having to wait for payback periods. On the other hand, when you buy solar panels it may take several months before you start seeing a return on your investment.
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.
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.
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.
One of the main drawbacks of leasing solar panels is that you won’t be able to claim government or private rebates and tax benefits, such as the 30% federal solar incentive tax credit. Depending on where you live, these incentives and rebates can make buying solar panels much more feasible financially. In some cases, they can shave off up to 39% of the total price of purchasing solar.
While leasing solar panels comes with little to no upfront cost, you might actually end up paying more over the long term when compared to buying a solar system outright. Lease payments can add up over the duration of your lease term and potentially surpass the cost of buying and owning your own system.
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:
When you lease a solar system, you generally won’t be allowed to make additions or modifications. This gives you less control over your solar system, like making upgrades or changes to suit your needs.
Buying a solar system means you own the panels and related equipment outright. While you may have to make an initial investment for the system and installation, you'll be able to benefit from long-term energy savings, incentives and tax credits, and increased property value - all while reducing your impact on the environment.
To see if buying a solar system is a better option for you, let’s look at the pros and cons.
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.
Owning a solar system lets you take full advantage of tax incentives and rebates. These incentives can help offset the initial cost of installing solar panels and make them more financially viable.
Tax credits and incentives you may qualify for when owning solar panels include:
You can read more about how federal solar tax credits work on the Office of Energy Efficiency and Renewable Energy website.
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.
When you own your own solar system, you’ll have more flexibility to upgrade or modify your system according to your energy needs and preferences. For example, you can add more panels or install a solar battery.
People who buy their own solar panels generally end up saving more money and getting more return on investment. According to EcoWatch, the average long-term savings for a solar lease are around $5,000 compared to $22,379 if you buy your own. This is because when you buy solar panels, you’ll eventually pay back the initial investment and just enjoy the reduced electricity bills. With solar leases, on the other hand, you’ll always have to pay the monthly fees which can reduce your savings.
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.
Buying solar panels requires a significant upfront investment, which can be a barrier for some homeowners. If you don’t have sufficient funds to buy solar panels, you can always take out a solar loan, however that means paying interest.
When you own your own solar system, you’re solely responsible for maintenance and upkeep. While solar panels are generally very low maintenance, last a long time, and most major items are covered in manufacturer warranty, if any repairs are not covered, you might have to bear the cost.
For many homeowners, the decision whether to buy or lease solar panels rests on their financial situation and long-term goals:
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 and a better return on investment. |
| Maintenance & repairs |
In most cases, you’re not responsible for maintenance and repairs. |
You are responsible for maintenance and repairs. |
| Control |
You have no 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. |
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:
Buying solar might be best for you if:
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.