Leasing Solar Panels - Is It Right For You?
Thinking about installing solar panels on your home? There are many things to consider prior to installing the panels, such as finding a good contractor, but the most important item is figuring out how to pay for them. Solar panel leasing is a great alternatives that can bring the initial cost of a solar panel system down to something much more affordable and sometimes can cost you NOTHING up front.
What Exactly is Solar Panel Leasing?
Just like when you lease a car, which lets you drive the car without paying a large upfront cost, solar panel leasing lets you use solar panels to generate electricity for your home with little to no upfront expense. You may also see it referred to as solar financing, solar power purchase agreements (SPPA's), or solar rental programs.
Solar panel leasing is gaining in popularity because it is a great alternative to buying solar panels and it is the fastest-growing segment of the solar industry.
What Are the Advantages of Solar Panel Leasing?
- Requires little if any upfront costs, then a fixed monthly rate that is locked in for the life of your contract. This monthly rate may be 10 to 20 percent lower than what you normally pay on your electric bill.
- For those who cannot afford to purchase their own solar panels for $20,000 to $50,000, leasing makes solar panels accessible to all.
- You're still hooked up to the grid so you always have access to electricity if and when you are unable to get all the power you need from your solar panels.
- The solar panel provider is responsible for cost of installing the solar panels and for all future maintenance and warranty issues.
- If you sell your house before your contract is up, the contract can transfer to the new homeowner for whom solar panels may be a strong selling point.
- At the end of your contract, providers may offer you the option of purchasing your solar panels at Fair Market Value. This is generally advantageous to the provider, as used solar panels aren't worth much more than the cost of of removing them from your house.
What Are the Disadvantages to Solar Panel Leasing?
- Solar panel leasing providers require you to sign a contract binding you to the agreement for 10 to 20 years.
- Assuming the cost of solar panels is going to fall and/or government subsidies are going to increase, leasing could ultimately cost more than buying if you're stuck in a 10- to 20-year contract.
- The provider benefits from whatever local tax incentives are in place, as well as the 30 percent federal tax credit.
- The provider benefits from any excess power generated that can be sold to the local utility company.
- Though the contract is transferable to a new homeowner, that assumes the new homeowner wants to get locked in to a contract and that they have the excellent credit necessary to qualify.
- If you break your contract, you will probably be expected to pay in full to the end of your agreement.
- Though your monthly rate for power is locked in through the end of your contract, the cost of leasing the panels may increase 3 to 4 percent each year.
How Can I Find Out if Solar Panel Leasing is Right For Me?
If you would like to go solar but don't know if solar leasing would be right for you, we advise you to do your due-diligence and make sure to explore all of your options. There are a lot of solar panel companies out there so make sure to check them out thoroughly before you dive in. Here are a few helpful hints to get you started in the right direction:
- Evaluate Your Home - Confirm that solar is right for your home. Do you own your home? Do you have a roof with little shading and faces south, west or west?
- Get a Free Home Consultation - All of the big reputable solar leasing companies offer free initial home consulations. Take advantage of this and get as many quotes as you can. The more info you can gather, the better.
- Make Sure to Work Within Your Budget - When you sit down to decide whether or not to lease, make sure this fits within your budget.
- In the Long Run, Will You Be Saving Money - This is the most important aspect and one you must analyze very carefully. There is no point in switching to solar power if is is not going to help your bottom line.
Can I Find a Way to Calculate My Electricity Savings?
Here on our website, we offer a "hands-free solar calculator" which will tell you how many solar panels you will need based on your location. There are plenty of websites that offer DIY solar panel kits. One part of the equation is whether or not you will qualify for tax credits, rebates or any other type of solar power conversion incentives. Check with your local power company to see if they offer any rebates.
Another apect to concider is are you going to purchase the solar panels or lease them? This is where dealing with a reputable solar panel company comes into play. You will be able to sit down with a consultant and analyze which road is better for you. Here are a few companies we recommend:
Solar panel leasing is a great way to install solar panels with little to no money upfront. If you don't have the capital to purchase the panels, leasing a great alternative. But, before you dive into switching over to solar power, make sure to do your homework and explore every avenue and option. An informed consumer is a happy consumer.