Solar Arrays: Why Lease when you Can Own?
Renting and leasing-so common in so many industries. We sometimes rent or lease apartments, cars, electronics, and furniture, and some may even say we have a lease on life. In certain cases, a lease can offer the short-term, affordable commitment you seek. So it makes sense you might be asking yourself- “is it better to lease vs. buy my solar array?”
In the solar market, some companies will offer what seems to be a shiny alternative to purchasing solar outright. These companies go door-to-door targeting homeowners with an offer that, at first glance, might seem desirable. They will describe a solar lease as a financially sound alternative to owning that will lower your electric bill and allow you to take part in a sustainable lifestyle.
If you are thinking about going solar or have been offered this kind of lease by a solar company, which is usually a large national business, we are here to warn you of some of the flaws that come along with this kind of “investment”.
When it comes to solar panels, here’s why buying is best:
Return on Investment:
When a consumer leases solar panels, they pay for service fees, any consumption charges not covered by the solar panels, and a payment to the leasing company. Thus, you will continue to have a monthly bill ranging from $150 to $250 per month on average. The leasing company will say you are getting a discount on your electricity charges but for some homeowners, the payment might end up being the same, if not more than their current electric bill! If you choose to buy out of your leasing agreement, many companies charge more than the remainder owed.
Although purchasing solar requires more of an upfront investment, it will remain just that—an investment. With top-quality equipment, you can expect your solar panels to last typically around 30 years. 30 years with a very low monthly electric bill and a guaranteed return on investment long before then. If upfront cost is an issue, there are many solar loans that use the equipment itself as collateral, and not home equity. This means you are left with years of free electricity once the loan is paid off.
Tax Credits and Incentives:
The federal government offers great incentives when it comes to solar energy. There is a 30% tax credit that is given when you purchase solar. At the end of the day, you will still own your panels and receive a 30% payment for your project. With a solar lease, you own nothing, and it is the leasing company that gets the tax credit, not you. In addition the leasing company receives state tax credits and depreciation value. A hoped for 5 – 10% savings to you means thousands of dollars of profit for them.
Owning Solar can Increase the Value and Desirability of Your Home:
If you read our previous blog post, you’ll be fully up to speed as to how there is clear evidence that solar panels increase the value of your home. Solar energy is becoming more popular each year as consumers look to cut down on energy costs and be part of the solution to the current climate crisis. So, if you choose to sell your home, you have an asset.
If you choose to lease, this will inherently have the opposite effect. Consumers may hesitate to buy your property because they don’t want to take over the current lease. On top of the already many stressors of moving- you’ll also end up dealing with the hassle of an additional lien on your home.
Warranty and Service:
Locally owned companies like Same Sun of Vermont will ensure you have the best warranty and service promise for your investment. Same Sun uses only premium products with industry-leading warranties of up to 25 years when we install your solar panels, and we also offer a workmanship guarantee to provide free service for five years if you run into any issues!
When you lease vs. buy your solar, you may find that your service plan won’t cover any equipment problems. Damaged solar panels may fall on your homeowner’s insurance and your leasing company won’t be responsible.
When deciding between a solar lease or purchase, one option clearly outweighs the benefits of the other. Corporately owned solar businesses are often just looking for their next contract, be wary. Do your due diligence by researching a locally owned solar company in your area. Often, these are the people that want to ensure you get quality equipment and a good ROI.
As a company, we strive to provide unbiased information to fully educate consumers in their decision-making process. If you do choose to lease your solar, that’s not our business. (Pun intended)
Before signing a lease, contact us today.
More information on going solar:
https://www.energy.gov/eere/solar/homeowners-guide-going-solar
https://www.energy.gov/eere/solar/homeowners-guide-federal-tax-credit-solar-photovoltaics
