Buying Vs Leasing Residential Solar: The Pros And Cons

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There is a growing international trend toward using renewable energy, and individual homeowners are increasingly deciding to switch to solar power. Once they’ve made that decision, they are faced with two options: either buy the solar system outright or lease it. Both have pros and cons, and the right answer in your case might not be the same as for your neighbor.


Pros of a solar lease


  • When leasing a solar system you don’t have to make any upfront payment. With solar systems costing as much as $30 000 (for a large system), this is an important consideration for many homeowners, but it should not be the only one.
  • The leasing company normally takes care of any necessary replacements, repairs and maintenance. This is often not taken into account by homeowners who decide to buy a solar system. Inverters typically have a 10-year warranty, and eventually you will have to replace them.
  • You will have a fixed monthly payment, which makes budgeting easy.
  • The installation cost is added to the total cost of the system and included in your monthly lease payments, which means no installation bill at the start of the contract.

Cons of a solar lease


  • Since you don’t own it, a leased solar system does not add value to your home.
  • If you sell your home, you will have two options: pay off the balance of the solar contract in full, or convince the buyer to take over the lease. If the buyer does not qualify, this can actually have a negative impact on the value of your home and make it more difficult to sell.
  • The typical lease term would be between 10 and 20 years, mostly with regular annual price increases. This is only a good option for someone who has no plans to sell that particular home within this period.


Pros of buying a solar system outright


  • A solar system will increase the value of your home and make it easier to sell. National Renewable Energy Laboratory recently conducted a study into this and found that residential properties with solar panels on average sell for 17 percent more, and they also sell 20 percent faster.
  • Federal tax credits. In 2020 owners of new residential solar systems are allowed to deduct 26 percent of the total cost from their income taxes.
  • Apart from state and federal tax credits, homeowners in Massachusetts who buy a solar system for their home could also qualify for exemption from property taxes. The Renewable Energy Property Tax Exemption allows for a 100 percent exemption on such a home’s property taxes for the next 20 years.
  • Qualifying homeowners are able to finance their new solar systems via a second mortgage or a home equity loan. This allows for a regular monthly payment without any annual increases.
  • When buying a solar system, you can decide what size system you want, and where you want the solar panels to be located. When leasing, the leasing company would to a large extent make these decisions.
  • Depending on your state, you could earn SRECs (Solar Renewable Energy Certificates) at a rate of one SREC for every 1,000 kWh your system produces. These can be sold for as much as $300 in some states.


Cons of buying a solar system outright


  • Buying requires either a large upfront cash outlay, or you have to qualify for a loan. If neither of this is possible, leasing might be the only other option.
  • As the homeowner, you are responsible for maintenance. If the system is not properly maintained, the warranty might become null and void.
  • You are also responsible for repairs. Solar systems don’t last forever, and if something goes wrong, the repair bill is for the owner’s account.


By now you should have a better idea of whether buying a solar panel system or leasing it will be the right choice for your individual circumstances. Hopefully, you will soon become one of a new generation of people who support green energy – and save money in the process.


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