Which Is Better? Leasing or Buying Solar
Wondering whether to buy or lease your solar?
If you’re looking into solar, a major decision you’ll have to make is whether you want to lease or buy your system. There are several factors to consider, such as monthly payment amounts, and if you want to keep your panels once they’re paid off.
Just like renting vs. owning a home, there’s no right answer — it’s about what works best for you. But it’s important to know what’s what, so here’s how it all breaks down:
What do the monthly payments look like?
BUY
Most people choose to finance their solar system purchase. We offer a fixed, predictable monthly payment that never changes over the lifetime of your loan, with no down payment required.
LEASE
A lease contract may start you out with a lower monthly payment than ownership, but it’s likely to contain an escalator clause that increases your payments by 2.9% per year. This can really add up in the later years of your lease.
What’s the deal with tax credits?
BUY
When you buy your solar system, you get to claim the federal solar income tax credit (currently 26% of the total solar system value), which significantly reduces your overall cost.*
*Individuals or organizations such as non-profits that pay little-to-no federal taxes are not able to reduce their costs through this tax credit.
LEASE
When you lease a solar system, the lease-holder receives the tax credit, and they may or may not pass the savings on to you.
What about your home value?
BUY
Your home’s value will go up. Prospective home buyers see solar ownership as a perk and are willing to pay, on average, $26,000 more than for a comparable non-solar home.
LEASE
When panels are leased, your home value doesn’t increase
What if your solar needs fixing?
BUY
When you buy your solar system, any maintenance it may need is almost always covered by your equipment warranties.
LEASE
One of the biggest selling points of a lease agreement is that any and all maintenance costs are covered for the lifetime of the lease.
What happens when your payments are up?
BUY
Once you pay off your solar loan, you own your solar system outright, and all the electricity it generates is yours for free!
LEASE
When your lease term is up, the lease-holder will remove your panels and inverter, or you can choose to purchase them for their fair market value.
| BUY | LEASE |
|---|---|
| No down payment | No down payment |
| Monthly payments never change | Monthly payments usually increase |
| Most maintenance costs covered by equipment warranties | All maintenance costs covered by lease-holder |
| You receive the solar tax credit | Lease-holder receives solar tax credit |
| Home value goes up | Home value stays the same |
| When the loan is paid off, you own your solar panels | When the lease is up, the panels are not yours to keep |
| Saves you more money in the long run | May save you more money up front |
“Many leases contain an escalator clause that can further reduce savings by increasing payments 3 percent per year. … If the cost of energy doesn’t rise as quickly as the contracted lease payments increase, your savings could evaporate.”
“Many leases contain an escalator clause that can further reduce savings by increasing payments 3 percent per year. … If the cost of energy doesn’t rise as quickly as the contracted lease payments increase, your savings could evaporate.”
The bottom line:
The biggest difference between the two models is that when you buy your solar system, the panels are yours once they’re paid off, which means a steady stream of free, and clear clean energy for years to come.
So, while leasing may look more affordable at first glance, ownership offers more savings over the lifetime of the system, especially if you’re able to take advantage of the federal solar tax credit. Whichever you choose, make sure to read the fine print in any solar agreement you sign!
Ready for the next step?
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