Leasing Solar Panels


Solar Panel InstallationI’d like to buy a solar electric system but am not sure I can afford to purchase one. Is leasing a system a better option? 

I hear this question a lot. Solar electric systems have never been more affordable than they are right now, thanks to record-low module costs, generous federal tax incentives and financial incentives offered by many local utilities. Even so, out-of-pocket costs for a system that would meet the needs of a family of four for at least 30 years could run as much as $15,000 to $25,000 — or even more, depending on available incentives and the household’s annual energy consumption. Not surprisingly, a price tag like that creates sticker shock in a lot of potential customers.

Don’t despair! For those who can’t afford the upfront cost of a solar electric system, one option is to secure a loan so that you can make monthly payments. In some cases, this option can result in payments lower than your current monthly electric bill. And, as you suggested, solar leases can be another good option.

You could potentially lease a solar electric system from any third party, but it would typically be from a company that specializes in solar leases. Two such companies are SunRun and SolarCity, but you’ll want to search online to find what’s available in your area.

In general, two types of solar leases are available. The most common is an operating lease. In this case, the third party (the lessor) installs the system at its expense and is therefore considered the owner of the system. It receives all the tax benefits, such as the current 30 percent federal investment tax credit, and local utility rebates, if any. The terms of lease agreements vary considerably and are often tailored to the finances of the homeowner or business owner (the lessee). Some operating leases require no upfront payment, while others require a small down payment. The cost of maintenance and component replacement may fall on the shoulders of either the lessor or the lessee.

After the system is up and running, the customer pays a monthly fee to the lessor, which includes a lease payment and payment for the electricity the system generates. These payments are typically structured so that the combined cost results in a slightly lower monthly utility bill than the lessee was paying before the installation of the solar electric system. The lease payments are typically designed so the customer’s payments remain stable throughout the lease, but in some cases, lease payments may contain a built-in escalation.

12/9/2015 2:42:11 AM

This was helpful. We are serious about going full solar for as much of our household needs as possible. I was not aware that leasing was an option or the different types of leasing. I feel more confidant to make some phone calls now to get estimates. Thank you.

3/2/2015 12:33:35 AM

The price for solar panels have dropped quite a bit since this article was written, making leasing solar panels an even worse idea today. Check out http://solar-power-now.com/cost-of-solar/ to find get the up-to-date price of solar power as of 2015.

2/27/2015 9:48:20 AM

One more poorly thought out, rehashed article from Mother Earth. Here is a question to think about; what if you want to or need to move? What if something happens to the house? It is not good. If you have a major storm or fire, you are out of the system, but not the lease. Few insurance polices will cover them, unless you have a specific rider for the system. You are stuck for the lease, period! But wait it gets worse and quickly. http://www.newsmax.com/BradleyBlakeman/Roof-Solar-Panels-Fraud/2014/03/14/id/559661/ Leasing it the absolutely worst way to "purchase" anything. You will always pay more than buying it. You have very little recourse in the event of something going wrong, and the worst part is you are stuck! The only people that like leases are those getting the money from the lease!! While leasing an auto can make some sense for a business, it is one of the worst methods of financing any purchase for an individual. Never lease a solar system. Unless you like being a giant sucker. Even borrowing the money on your home is at best a poor idea, look at the total numbers of the cost over the period of the loan, it will jump out at you when you do this. The cost projections going forward for energy are not close to what are used for "solar savings" by having a solar panel system on your house. I am in favor of using solar and many other methods, I am just not in favor of people being swindled and that is most of what is happening with leases! From the BBB, worth reading too. Notice not many comments about how good of a deal leasing is, but lots of warnings about how easy it is to be swindled. http://www.bbb.org/blog/2012/06/dont-fall-for-a-solar-paneling-scam-this-summer/ Never lease, unless you really like paying out the nose for something!

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