Solar energy has never been more popular in the United States. This truth of this claim is backed by the growing number of people who work in the solar industry, the amount of electricity generated from solar, the number of rooftop solar panel installations, and more. Let’s take a look at some statistics:
That’s a lot of people falling in love with energy from the sun, and according to market trends, you’re probably one of them! But even after some initial research into powering your home with solar energy, you still have some questions. At the top of that list lies the big one:
“Should I lease or buy solar panels for my house?”
Addressing the costs of solar energy for your home is the right question to ask. We think everyone should start using energy from 100% renewable energy sources, so that means we should figure out how to help everyone get solar. In fact, Chariot Energy give you access to electricity from 100% solar power without you needing to add solar panels to your roof.
But if you do want to use the direct power of the sun in your home, it’s important you understand all the details so that you make the right choice for you. Thus, we want to explain the difference between buying and leasing solar panels, complete with some essential pros and cons.
The
short answer? It’s just like anything else you lease — a home, a car, some land
— except that it’s specific to rooftop solar panels. You receive all the
benefits of powering your home with solar energy without having to worry about
the upfront costs or long-term maintenance. Let’s examine this a bit further:
You
also have two different ways to obtain these solar panels for your roof: a
solar lease and a solar Purchase Plan Agreement (PPA).6
Like any lease, you’re renting the materials for a specific amount of time, and you contractually pay a certain amount every month. That price is typically determined by the average amount of energy the panels on your roof generate each month. And that means it could go up each month at the whim of the solar leasing company.
In
this situation, you’re paying for the electricity being generated rather
than paying for the panels. This makes it more akin to signing up for a
green energy plan from your local retail electric provider, but with this
method, you’re actually using solar energy instead of buying Renewable Energy Credits (RECs).
Both
of them involve having a third-party company owning the panels while you get to
participate in the renewable energy revolution. Leasing remains the perfect
option for people who want to use solar power but don’t want the responsibility
of owning the actual solar panels or have the finances to make an outright
purchase.
There are two key reasons for the rise in solar panel installations over the past decade: the cost of the materials has decreased as panel efficiency has increased, and the U.S. government created the Solar Investment Tax Credit (SITC) to encourage people to purchase solar panels.7 Thus, for everyone who wants to own their solar panels outright instead of leasing them, you have two choices:
By cash, we mean you have the ability to pay for everything at once, so you can definitely use your credit card or obtain a cashier’s check from the bank instead of plunking down a stack of bills. This method puts you in complete ownership of your entire rooftop solar system from Day 1, including all of the savings.
Think
of it like making any other sizable purchase in life: if you don’t have the
funds to pay for your solar panels all at once, you can take out a loan. This
process assumes you have good enough credit to get a loan with a good interest
rate from a bank, credit union, or solar installer. If the interest rate is too
high, you won’t experience the true depth of savings from your solar panels.
Again, the point of buying your solar panels outright is to give you the maximum amount of savings.
Hopefully,
we’ve given you have a better idea of how you can obtain solar panels for your home. Now, we want to compare and contrast these methods so you
can make the right choice for your life. What works for your neighbor won’t
necessarily work for you, so it’s important you have all the details and
nuances involved with this decision.8
If
you want to lease your solar panels, it’s typically because you don’t want to
bear the large upfront cost of buying them. This is especially true since solar
loans aren’t available in every area. Thus, you can expect to enjoy the
following perks:
Then
again, leasing does mean you’re missing out on a few of the benefits offered by
full ownership.
Another
negative about leasing involves moving to a new home before you finish the
terms of your lease. Since the lease is tied to the actual house, it can be
difficult to sell your home because the buyer might not want to take over the
rest of that lease. While some solar companies let you pay to remove them as a
way to break your lease, that can be cost-prohibitive for some people.
If you’re truly interested in buying your solar panels, the following discussion will definitely put the entire situation into sharp relief. Even with the SITC, this will be a major purchase, so you and your family need to have a serious conversation with all the possible information on-hand.
Is
it a large up-front price? Yes. But will the savings be worth it? Absolutely.
Full ownership of your own solar system provides several excellent benefits.
The
savings are so substantial with owning your own solar panels that the industry
average for paying yourself back from the initial purchase price is five to
seven years. That means, since the average solar panel lasts 20-25 years, you
could enjoy up to 20 years of free solar power after you pay back your
investment!
Both
research and anecdotal evidence tells us that the one thing holding people back
from installing solar panels is the large upfront cost. This is especially true
since loans and leasing aren’t available nationwide — typically only in areas
where solar installers can make the maximum return on their investment. Simply
put, solar panels are expensive.
Even
more, leasing advocates will tell you that solar panel ownership means you’ll
have to pay for maintenance. While that’s true, solar panels are designed to
withstand terrible weather — including hurricanes — and they also come with
substantial warranties, insurance, and other protections. Hence, owning solar
panels really isn’t the onerous maintenance problem some might believe.
Here
we are: leasing vs. buying. Both give you the “warm fuzzies” of knowing you’re
helping the planet by using renewable energy from solar power in your home.
Leasing offers you solar panels with limited upfront costs, but lower lifetime
savings, while buying asks you for a large initial investment, while promising
relatively prompt payback and higher lifetime savings.
To
put it another way, check out this 2016 chart from Consumer Reports.
To summarize:
And
when you factor in paying yourself back, you’re making close to $90,000 in
savings over 20 years. That’s a huge argument in favor of full ownership.
In
fact, most solar industry experts recommend ownership over leasing because of
those greater financial benefits. You’re able to use all of your solar
energy, instead of ceding your tax credits and solar buyback potential to
a third-party solar installer.
Most
of them also recognize that not everyone can afford outright ownership. And
when combined with statistics showing that over 75% of Americans simply can’t
use rooftop solar, it’s obvious the industry has a long way to go before it
reaches full-scale adoption.9
This
is why it’s important that people have access to affordable electricity plans
like those offered by Chariot Energy. By creating excellent renewable energy
plans from 100% solar energy, we give Texas residents the ability to show their
love of the environment without needing any solar panels on your roof. The
world needs to reduce its dependence upon electricity from fossil fuels, and
you can do your part by signing up for electricity from Chariot Energy today!
Sources:
1.
https://www.seia.org/news/us-solar-market-adds-106-gw-pv-2018-residential-market-rebounds
2. https://www.seia.org/solar-industry-research-data
4.
https://www.seia.org/us-solar-market-insight
5. https://www.energy.gov/eere/solarpoweringamerica/solar-energy-united-states
6.
https://www.energysage.com/solar/financing/should-you-buy-or-lease-your-solar-panel-system/
7.
https://www.seia.org/initiatives/solar-investment-tax-credit-itc
8.
https://www.npr.org/2015/02/10/384958332/the-great-solar-panel-debate-to-lease-or-to-buy
9.
https://solstice.us/solstice-blog/why-americans-cant-access-rooftop-solar/
