First off, what’s the difference between all solar financing options? RevoluSun is proud to offer solar system purchasing (with or without loans) and leases/Power Purchase Agreements (PPAs). If you choose to lease your solar system, then it is owned by a third party. Leases typically last for 20 to 25 years, at the end of which you can choose to buy out the system, continue the lease, or have the panels removed. A purchase is a cash purchase of the system in which you own the system outright. A solar loan still allows you to own your system once the loan is paid off. Let’s look at each type more in depth.
Purchasing
Advantages
Monetary Benefits – Maximized long term financial benefits through the solar renewable tax credit (30 percent off the cost of the system), net metering, SRECs, etc.
Home Value – With one panel, the retail value of your home increases. As you add more panels, your home value increases more per panel. A Department of Energy Sunshot Initiative study determined that homes located in the Northeast with solar panels sold for on average for about $99,000 more than homes without them. Solar power systems on average increase the value of a home by $4 per watt. The Department of Energy claims that adding a solar array to a home could increase the value by $15,000. Businesses can also profit and can reap tax benefits by treating the solar panel system as a depreciable asset.
Maintenance – Most manufacturers have warranties for about 20-25 years, so during this time maintenance and repairs (if needed), are performed by the manufacturer.
Things to Consider
Time – While positive returns on solar panels are on the way, it could take some months for the homeowners to turn a profit on their panels.
Money – Panels are the most affordable they’ve ever been, but that still doesn’t make purchasing panels cheap before incentives.
What About Loans?
More Savings than Leasing – The monthly savings from a loan are likely to be higher than the savings from a solar lease or PPA. Solar loans are normally paid in 7 to 15 years, while leases require payments over the term of the agreement, which could be 20 years.
Monetary Benefits – You get the direct benefits of all financial incentives (federal, state, and local).
Leasing
Advantages
Monetary Benefits – There are little to no up-front payments, and you typically save 10 to 30 percent on your utility bill.
Maintenance – The leasing company is responsible for all maintenance and monitoring of the systems.
If You Sell Your Home – You can actually transfer the remainder of your lease over to the new owner when you sell your home, or purchase the system and include it in the sale price of your home.
Things to Consider
No Tax Benefits – When you lease solar panels, benefits like tax credits and rebates are enjoyed by the leasing company.
Lack of Ownership – For some homeowners, they are more comfortable owning the solar panels outright. Ownership increases the market value of your home after installing a solar panel system. Home sellers that have solar leases or PPAs either need to buy out the lease/PPA from the third party owner (solar company) or transfer the lease to the new property owner.
Payment Increase – Monthly payments increase by a predetermined rate each year, usually between 1 and 3 percent
You Have Options
Choosing a solar financing option might be difficult. Purchasing offers the most financial benefits over time, but can be difficult because a homeowner would have to pay for all of the panels and labor. Purchasing might be the best option for a homeowner willing to put down more cash up front, but want to maximize their long term monetary benefits. The solar loan is best for the homeowner who doesn’t have the money for a cash purchase, but wants to maximize their benefits from solar. For solar leasing, this option is best for the homeowners who don’t have the capital for a down payment. While leasing doesn’t allow for maximum savings and profits from solar, it still reduces the homeowners’ monthly electricity bills significantly. However, no matter the option, the immense environmental benefits and monetary savings from solar energy are clear.
Works Cited:
- Solar Loans vs. Solar Leases: https://www.energysage.com/solar/financing/comparing-solar-loans-vs-solar-leases/
- Home Solar Panels: Pros, Cons, and Hidden Costs: https://www.expertise.com/green/home-solar-panels-pros-cons-and-hidden-costs
- Solar Leases & PPAs: https://www.energysage.com/solar/financing/solar-leases-and-solar-ppas/
- Should I Purchase or Lease My Solar Panels? (Hint: It’s Kind Of Like Cars But Not Really): https://www.svssolutions.com/blog/should-i-purchase-or-lease-my-solar-panels-hint-its-kind-of-like-cars-but-not-really
- Solar Increases Values of Northeast Homes Considerably, Study Finds (with a Top 10 list): https://pv-magazine-usa.com/2017/04/12/solar-increases-values-of-northeast-homes-considerably-study-finds-with-a-top-10-list/
- Should You Buy or Lease Your Solar Panels?: https://www.energysage.com/solar/financing/should-you-buy-or-lease-your-solar-panel-system/