Lease vs. Buy Solar Panels

The decision to lease or buy solar panels is unique to a homeowners specific situation and we created the following guide to help homeowners with the decision.

When to Lease Solar Panels

  • Homeowner or business that is ineligble for state and federal incentives
  • Wants to avoid maintaining and monitoring the system

When to Buy (Loan or Cash) Solar Panels

  • Homeowner wants to maximize the financial benefits of owning a solar system
  • Homeowner is eligible for federal and state tax credits associated with the system (see TurboTax information on solar tax considerations)
  • Business that can realize tax depreciation on the solar system
  • Interested in coordinating basic administrative work associated with tax credits and monitoring/maintaining the system

Comparison of Solar Leasing and Purchasing a Solar System

  • Terms – Solar loans are available with 10-25 year terms and will carry interest rates from 3%-8% depending on credit score and Lease/PPAs have terms of 20-25 years with renewal options
  • Installation Cost – A Lease/PPA requires no money down, while a purchase or loan costs between $20,000 and $30,000 before a 30% federal tax credit
  • Maintenance – In a Lease/PPA, the homeowner does not own the system and is not responsible for maintenance.  With a loan or purchase, the homeowner is responsible for the purchase, although most installers offer a service contract
  • Financial Savings – Consumer Reports estimates that the net savings of a solar system purchased with a loan are nearly 50% more than with a lease.  The cash payments scenario in the article is not comparable to the no money down loan due to the time value of the upfront cash investment