<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=1790353591186260&amp;ev=PageView&amp;noscript=1">

AllEarth Solar Power Blog

VIEW RESOURCE CENTER

Should You Lease or Buy Solar?

Posted by AllEarth Renewables on April 1, 2016 in Solar System Issues and Considerations, Advantages of Solar Power, Types of Solar, Solar Financing, Small Commercial Solar, Consumer

lease_vs._buy_graphic.jpgYou've decided  you want to go solar, and now you have to decide if you should buy your system, or lease it. If you're not familiar with solar, this can be a daunting decision with lots of factors to consider. Here are some of the top things to keep in mind to help you make your choice. 

Upfront Costs

One of the biggest reasons people choose to lease their solar system is to avoid upfront costs. You'll simply sign your lease agreement with little to no money down, and will be billed monthly by the company that owns the system. Buying, on the other hand, requires an often-significant down payment. If you don't have the funds to account for this upfront cost, leasing might be the right solution for you. If you are able to make the upfront investment (or can take advantage of loans and tax credits to make it more affordable for you), paying those initial costs will be worth it in the end. 

Total System Expense

Buying your solar system is a great investment--once you've paid off the cost of the system, you'll be receiving "free" energy for the rest of the system's life. In addition, buying your system gives you access to financing options such as loans, as well as tax credits, which can reduce the overall cost of the system by up to 30% and may result in you paying less over the long run. If you are a business, or otherwise have a significant tax appetite, you can also treat the solar system as a depreciable asset, which can also result in tax benefits that will offset the system cost.

Leasing, on the other hand, guarantees that you'll be paying the system's owner for the life of the lease (which can be up to 20 years), and while these payments are relatively low, they aren't necessarily fixed--they often increase year over year. And while most lease agreements give you the option of purchasing your system at a reduced cost at the end of your lease, this expense is still high and increases the total amount paid over the life of the lease by quite a bit. Although you're not putting money down up front, you'll ultimately end up paying more if you lease rather than buy your solar system.

Ease - What Is Required of You?

Another selling point for leasing solar is that it's simple. Once you meet with the system owner and sign the contract, they'll handle the installation for you and get you running on solar in no time. Operations & maintenance is typically included in lease agreements, meaning you don't have to worry about system upkeep - it's all taken care of.

Buying, on the other hand, requires some legwork before the purchase is made, such as finding and applying for loans, and getting help in understanding how to take advantage of available tax credits. You also are responsible for system maintenance, whether it's paying your installer an additional fee for an operations & maintenance contract or doing some of it yourself (clearing snow off of panels in the winter and landscaping in the summer, for example). While you might have to spend some time figuring out what your responsibilities will be, having a sense of them before making your decision will pay off in the long run.

The Future of Your Property (and Your Solar System)

It's important to think about how long you're planning on living in your home or owning your business property, and what your plan of action will be if you decide to move. If you buy your solar system, you'll want to make sure that you plan to stay long enough to recoup your investment, but other than that, selling is easy - and studies show that a solar installation can even increase the value of your home.

Leasing, however, can be more complicated. Make sure your solar lease agreement isn't longer than the period of time you envision spending in the propety, and find out ahead of time what your options are if you do decide to move before your lease is up. With some work, you can usually transfer your lease to the new owner, but it may be difficult to find someone who is both willing to take it on and qualified by the lease holder to do so. 

Your Reasons for Going Solar

Do some thinking about what your reasons are for going solar, as this can help determine your decision. Are you passionate about doing what's good for the planet, and creating both a clean energy future and a lifestyle that's powered by home-grown energy? Or are you interested in the dollars and sense of solar, and trying to reap the best possible return on investment while significantly lowering your energy bills? Many people fall somewhere in between these two goals, so the factors listed above will come into play more--but if you are simply interested in the system's environmental benefits, the financial incentives of purchasing may matter less to you. Similarly, even if you have a desire to create clean energy, if ROI is your ultimate goal, you'll know that leasing won't make sense for you in the long run. 

Ultimately, deciding whether you should lease or buy solar is up to you - there are advantages and disadvantages to both. Luckily, both are great options, and whichever one you choose, you'll be powering your life with solar and declaring your energy independence soon enough!

Product Tour Solar Panel

Product Tour

Learn more about the advantages of AllEarth dual-axis solar trackers.

Our Solutions
icon become a partner

Become a Partner

Stand out in the crowd with our powerful dual-axis solar trackers.

Learn More
icon-how-to-access-solar

Assess your Solar Investment

Discover a better approach for measuring solar system performance.

Learn More