As solar energy continues to gain popularity among homeowners in the United States, one of the most common questions is: Should I lease my solar panels or buy them outright? Both options offer unique advantages and potential drawbacks, and the right choice depends on your financial situation, long-term goals, and preferences. In this blog, we’ll break down the pros and cons of both solar leasing and buying, helping you make an informed decision that could save you money in the long run.
Understanding Solar Leasing and Buying
Before we dive into the details, it’s important to understand the basics of both options:
- Solar Leasing: With a solar lease, you essentially rent the solar panels from a solar provider. You agree to pay a fixed monthly amount for using the system, typically for 20 to 25 years. The provider usually handles the installation, maintenance, and sometimes even insurance of the system.
- Buying Solar Panels: When you buy solar panels, you own them outright. You can either pay in full upfront or finance the purchase through a loan. With ownership, you are responsible for the installation, maintenance, and operation of the system. However, you also reap the full financial benefits of solar energy, including tax incentives and energy savings.
Initial Costs: Lease vs. Purchase
One of the most significant differences between leasing and buying solar panels is the initial cost.
- Leasing: One of the main appeals of leasing is the low upfront cost. In many cases, there are little to no initial costs required to lease a system, making it accessible to homeowners who may not have the cash to buy. This is ideal for people who want to switch to solar but don’t have significant savings or access to credit.
- Buying: Purchasing solar panels involves a higher initial cost, typically ranging from $15,000 to $25,000 for an average-sized residential system. While the upfront cost is higher, there are several financial benefits, including tax credits, rebates, and increased home value. If you’re eligible for federal tax credits (which are currently at 30% of the total installation cost), the price of buying is significantly reduced.
For homeowners who can afford the upfront investment, buying solar panels may make more sense financially in the long run.
Financial Savings: Lease vs. Purchase
- Leasing: With a solar lease, you’ll pay a fixed monthly payment, usually ranging from $50 to $150 per month. While this is generally lower than a typical electricity bill, the savings are limited to the difference between your solar lease payment and what you would have paid to your utility. Essentially, you’re renting the system and still paying for your electricity consumption, but at a lower rate.
Furthermore, you do not get to take advantage of federal tax credits or other incentives since you don’t own the system. This means your savings are somewhat constrained compared to owning. - Buying: When you buy solar panels, your long-term savings are much greater. Once the system is paid off, your energy costs drop significantly. On average, homeowners who purchase solar panels save between $10,000 and $30,000 over the life of their solar system, depending on energy consumption, location, and utility rates.
After the initial cost and installation, your only ongoing costs will be maintenance (if needed) and potential upgrades. If your system is producing more energy than you need, you can even sell the excess energy back to the grid in many states, turning your solar energy system into an income-generating asset.
Ownership Benefits
- Leasing: The main advantage of leasing is that you don’t have to worry about maintenance, repairs, or system upgrades. The leasing company generally takes care of these aspects, which can be a relief for those who don’t want to deal with the technical side of solar energy. However, with this convenience comes the fact that you don’t own the system and therefore don’t have the opportunity to take full advantage of the financial benefits.
- Buying: When you buy solar panels, you become the owner of the system. This means you can take full advantage of federal tax credits, state incentives, and increased home equity. Plus, if you decide to sell your home, the value of your solar system can be added to the selling price, making your property more attractive to buyers.
On the downside, the responsibility for repairs and maintenance falls on you. While solar systems are designed to be durable and require minimal maintenance, the cost of potential repairs or upgrades can be higher than leasing. However, with proper care and occasional servicing, a solar system can last 25-30 years.
Long-Term Financial Implications
- Leasing: Over the long run, a lease can end up costing you more than buying. With a lease, your payments last for 20-25 years, and at the end of the term, you may have the option to buy the system, renew the lease, or have the system removed. You are essentially locked into a payment schedule, and while your energy costs will be lower than traditional electricity bills, the savings may not add up as quickly as they would if you owned the system.
- Buying: While buying a solar system requires a larger investment upfront, the long-term financial benefits far outweigh the initial cost. Once your system is paid off, you will enjoy free electricity (except for maintenance or repair costs). Moreover, owning a solar system increases the value of your home, making it an investment in your property’s future.
Additionally, with ownership, your financial commitment ends after a few years, while leasing continues for decades. The return on investment (ROI) for a solar purchase can range between 10-20% annually, making it a solid long-term investment.
Which Option Saves More Money?
In the long run, buying solar panels will save you more money than leasing. While the upfront costs are higher, the long-term financial benefits—tax credits, energy savings, and increased home value—more than make up for it. With a purchase, you’re investing in an asset that continues to save you money throughout its 25-30-year lifespan.
That said, if you’re unable to pay the upfront costs or don’t qualify for financing options, leasing can still offer immediate savings compared to traditional utility bills. It allows you to make the switch to solar without the financial burden of a large initial investment.
Conclusion: Which Option is Right for You?
Ultimately, the decision between leasing and buying depends on your financial situation and long-term goals. If you have the financial means to invest upfront, buying solar panels will likely offer the greatest savings and benefits in the long run. However, if you’re looking for a low-cost, hassle-free way to switch to solar, leasing may be the better option for you.
At Opalescent Solar Energy, we’re committed to helping you make the best decision for your energy needs. Whether you choose to lease or buy, our team is here to guide you through the process and help you harness the power of the sun to lower your energy costs and reduce your carbon footprint.
Ready to explore your options? Get started on your solar journey!
