If you are considering using solar energy to power your home or place of business, you are not alone. As environmental awareness increases and utility costs rise, many homeowners and residential property owners are turning to solar power as an alternative way to lessen their carbon footprints and lower electricity bills.

It is a critical decision that can significantly affect your finances and the value of your home or residential apartment. If you have already started researching solar panels and the available options, you have likely discovered that you have multiple ways of going green. Buying and leasing are two of the most popular options.

Each option has merits and demerits, and the ideal option for you depends on your long-term plans, energy goals, and the current financial situation. If you are wondering whether to buy or lease solar panels, this article is for you.

The Primary Distinctions Between Solar Panel Purchase and Leasing

Comprehending the basic differences between renting or leasing and purchasing a solar panel is crucial if you consider doing so as a green home improvement project. These differences can affect various aspects of this crucial investment, including the initial cost, long-term savings, your responsibilities, and access to government incentives. Here is a look at these differences, respectively:

Ownership and Responsibilities

Your ownership level significantly impacts how much control and involvement you have over the solar panel. Like any other home appliance, your solar panel will be yours to keep after purchase, giving you full control over how it is used and maintained. Conversely, when you choose to lease solar panels, the leasing company will retain the ownership and control over them, including their maintenance.

With a leased solar panel, you cannot decide on any improvements or changes to the system because it is not legally yours. Therefore, if you want authority over the solar panel and its operations or usage, you should consider purchasing your own from a reliable and licensed dealer.

Up-Front Costs

The upfront costs for purchasing solar panels are generally high, which could be a deterrent for many homeowners. However, the high initial costs are an investment that will pay off in the future because your energy costs will reduce significantly. Conversely, leasing a solar panel has lower upfront expenses, making this option ideal for anyone with a limited budget.

Leasing a solar panel allows you to go green without breaking the bank or draining your savings.

Long-Term Savings

Even though purchasing solar panels has a high upfront cost, you will save more money in the long run because you will not have to pay a monthly lease cost, and utility rates may increase over time. Conversely, while leasing is cost-friendly upfront, this option has less cumulative savings in the long run because of the monthly lease expenses.

Access to Incentives

Purchasing a solar panel will qualify you for various federal, state, and local incentives, including the federal ITC (Investment Tax Credit), which permits you to use a certain percentage of the total system cost from your federal taxes. However, when you lease your solar panels, you will be ineligible for these incentives, which means your overall expenses on the system could be higher.

What it Means to Lease a Solar Panel System

Solar leasing is a common financial model that lets you install solar panels in your home or residential establishment without buying them outright. Instead, you will make fixed monthly payments to the leasing company to use the solar panel system. Like renting a car to run your errands, you will have the authority to use your leased solar panel system, but you are not the legal owner.

Generally, your solar panel system lease period will last fifteen to twenty-five years. During this period, the solar panel renting company will retain the ownership of the system, meaning they will be in charge of installation and maintenance. Here are the benefits of leasing solar panel systems:

There are Little or No Upfront Costs

One of the greatest benefits of leasing a solar panel is that your solar company will bear the full installation cost. Hence, it is ideal for any homeowner eager to go green by installing a renewable emergency source, but he/she cannot afford the full cost of the equipment and installation.

You Will Not Incur Maintenance Costs

Despite their generally low maintenance requirements, solar panels may occasionally require maintenance. Fortunately, you do not have to fret about these maintenance needs and costs if you are on a lease. The solar panel leasing company you work with will handle all the repair needs since they own it.

The Payments are Predictable

Once you sign a solar panel lease agreement with your provider, he/she will require you to make fixed monthly payments for the system, simplifying your budgeting.

Reduced Electricity Bill and Reliance on Fossil Fuel

When you go green by leasing a solar panel, you will save significantly on your utility bill because you rely on the system to power your home. That means you will draw less power from the electrical grid, reducing your reliance on fossil fuels.

While leasing a solar panel has advantages, it also has disadvantages compared to buying your solar panel system. These disadvantages include the following:

  • You will not enjoy government incentives and tax credits

  • The long-term savings potential will reduce

  • You will go through extra steps whenever you decide to sell your property

What Does Purchasing a Solar Panel Mean?

When you purchase your solar panel, you will become the sole and legal owner of the system. You can pay off your equipment cost in a single agreed payment or through the dealer's financing options. Once you complete making the payments, the solar panel will become yours. While the initial cost of buying solar panels is high, it is a significant financial investment for your future.

The decision to purchase a solar panel system is critical because it gives you control over electricity generation and usage. Whether you are a homeowner or residential property owner, buying solar panel systems to power your property has several benefits you cannot overlook. Here are some of the convincing reasons to consider purchasing your solar panels:

Larger Savings Over Time

The electricity it will generate will be cost-free once you buy and install your solar panels. That means you will save more in the long run and maximize your ROI (return on investment).

It Will Make Your Property More Valuable

An owned solar panel system can significantly increase your home value and lessen the hassle of selling it whenever needed. According to research by Zillow, a solar panel system could increase your home's value by four percent on average, depending on your solar panel system's strength and your residential location.

You Will Have Greater Control Over Your Solar Panel System

As mentioned in the previous paragraph, purchasing a solar panel gives you more control over the system because it is legally yours. That means you should consider purchasing your system from a licensed and reputable solar provider, depending on your home's energy needs. For example, if you own a solar panel system, you can install solar batteries to store surplus energy that it generates or add more solar panels to generate more electricity.

You Will Qualify for Government Tax Credits

Access to government incentives and tax credits when purchasing a solar panel can significantly reduce the total cost of this investment due to lower installation fees. Despite these clear advantages of buying a solar panel, it has its downsides as well, including the following:

  • You will be in charge of maintenance costs once your warranty expires

  • Higher initial costs

  • There is a chance that the technology introduced can become outdated after some years

Key Factors to Consider When Making the Decision to Lease or Purchase Solar Panels

Whether to lease or buy a solar panel is an issue you should not take lightly. Homeowners benefit from each option differently, but there are possible drawbacks you should be aware of.

Before making a decision regarding leasing or buying your solar panel, the following are the most critical factors to bear in mind because they can influence your home value, savings, and energy durability in the future:

The Duration You Intend to Reside In Your Current Home

If you plan to move into another neighbourhood after a year or two, leasing your solar panels is not a wise idea because it could make it challenging to sell the home. That is true because your prospective home buyer could be unwilling to continue with the solar panel lease agreement. Nonetheless, owning your solar panel could increase property value and lessen the hassle of selling it in the future.

Your Financial Aspirations

Leasing the equipment could be a smart financial decision if you want to save money in the short term and avoid the initial investment required to purchase solar panels. On the other hand, purchasing and owning solar panels is the best financial decision to help increase your property or home value and create lasting wealth.

Available Incentives

If you want to benefit from government incentives, consider purchasing your solar panels instead of leasing.

Energy Independence

If you plan to lessen the overreliance on the electricity grid for power and have full control over the power usage in your home, purchasing your solar panel system is smart.

Generally speaking, whether or not to lease or buy a solar panel will depend on your preferences. If you have trouble finding the ideal solution for your particular case and energy needs, consult an established and reputable solar panel installation company.

Frequently Asked Questions (FAQs) on Leasing and Buying Solar Panels

Choosing whether or not to lease or buy a solar panel is important, and most people will ask several questions before making the ultimate choice. Below are common questions people often ask about leasing and buying solar panels:

  1. What are the Available Ways of Paying for a Solar Panel?

Although purchasing solar panels could seem appealing because of the ownership benefits and savings potential over time, the initial investment could be a financial burden to many. Fortunately, various financing options that many dealers offer make owning a solar panel more accessible to many. Below are some of the common acceptable ways of paying for a solar panel:

  • Cash

  • Solar loan

  • Home equity loan

  • Financing

  1. What Happens Once My Solar Panel System Lease Expires?

Once the solar panel system lease agreement expires, you will have limited options, including the following:

  • Buy the solar panel system

  • Renew your lease

  • Remove the solar panel system

Since each option has advantages and disadvantages, the ideal option will depend on your financial aspirations and current circumstances. Before you sign your solar panel lease agreement, understanding the available options once it expires is vital.

  1. Will I Save Money When I Go Solar?

Whether you buy or rent your solar panels, this is a great investment in your property with significant savings. However, the savings will depend on the following:

  • The suitability of your property or home for the solar panel systems

  • The amount of power or electricity your home needs

  • How electricity rates shift over time

  1. How Much Does a Solar Panel System Cost?

How much you will spend on your residential solar panel system will depend on various factors, including the following:

  • Availability of tax credits and incentives

  • The size of the solar panel you prefer

  • Your roof type or design

Nonetheless, the latest average cost of a solar panel system as of Q2 2024 was approximately $2.99-$3.10 per watt. However, this cost varies from state to state.

Find a Credible Solar Installation Company Near Me

Deciding whether to buy or lease a solar panel is not straightforward, and your decision could have a long-lasting impact on your energy savings, property value, and finances. That is exactly where we at Sun Solar Electric come in. If you are unsure whether to buy or lease a solar panel system, we can offer the guidance that suits your unique preferences, including financial goals and energy savings.

We invite you to call us at 707-658-2157 to schedule your initial consultation with us wherever you are in the Bay Area.