A Residential & Commercial Rooftop Installation Company Solar Repair & Maintenance

Going solar is important no matter how you pay for your panels. More than a million solar installations have been completed as of May, 2016. It is estimated it will take only another two years before America reaches two million installations.

In 2014, 72% of the 1.2 GW of residential solar that was installed in the United States was owned by a third-party. The other 28% was directly owned by the customer, most of which was in loans. It is forecasted that by 2020, more solar customers will own their own system than lease when they install their system. More and more people are going to choose outright ownership of their solar energy system than leases as time goes on.

We know that going solar is important, but now how are you going to pay for it? Which is the better option: buying the system outright or leasing the system?

Why would someone lease solar panels?

The biggest reason someone would want to lease their solar energy system would be if they want to use solar power but do not care about ownership of the system. Other reasons include having a tax burden that is too low to take advantage of the 30% federal tax credit, you are a renter and do not own your own house, and you want to save money right away and do not care about about ownership of the system. 

The average system cost is around $20,000. Not everyone who wants to go solar has the allotted finances to afford it. However, going solar for zero dollars down is an attractive option for those with limited financing who want a reduced electricity bill while taking advantage of the environmental benefits that solar conveys. All you have to do is sign a contract and the leasing company puts the panels up.

The biggest disadvantages to leasing include not being able to take advantage of the 30% federal tax credit and not owning the system outright and therefore not being able to make changes to your system if you are so inclined to do so. Leasing households would also not be eligible to receive the money from SRECs. The SREC program provides a means for the creation of Solar Renewable Energy Certificates (SRECs) for each megawatt-hour of solar power. The SREC is sold separately from the electricity, representing the "solar" aspect of the electricity generated. 

The Biggest Reasons To Buy

Quite simply the biggest reason to buy is to take advantage of the 30% federal tax credit. This can often be the difference between solar being an attractive option or not. For those that lease a solar energy system, not only can you not claim the 30% federal tax credit, but you also cannot claim the lease payments as a tax deduction. If you lease, you will get a small discount off your electricity bills initially, but you will never be able to take advantage of the much higher savings that will be offered as electricity prices continue to rise in the future. The payback rate of a system is 9-10 years in Ohio. If the average warranty is 25 years, that means that you could receive 15 years or more of free electricity after the system is paid off.

There are loan options available if you cannot purchase the system up front. There are even special loan financing programs available including Eco-link that can take as much as 3% off the interest rate of your loan.  

Another advantage of purchasing the system is your ability to qualify for revenue from SRECs. If you lease your solar energy system, the leasing company receives all the SREC payments. SRECs are currently trading around $15. 

A lease can offer a homeowner solar for $0 down. However, there are plenty of loan options available for up to 20 years that also offer $0 down. Financing can be creative and you can orient the 30% federal tax credit into your loan payments over the life of your loan term to reduce your monthly payments. You can even choose the loan term that best suits your finances. The normal loan terms are 7, 12, or 20 years.

 

In conclusion, leases are not available in every state. If you want to take advantage of the 30% discount, receive SREC credits, as well as reduced interest rate loan payments our recommendation is to buy the system outright, with cash if you have it, with a loan if you do not.


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