he benefits of solar energy are well-known, but the hefty upfront cost may be a big obstacle to buying solar modules. One way to get around this is by leasing the panels instead. This article covers the major aspects of solar system lease, such as the contract terms, solar panel lease cost, and pros vs. cons.

Do you have to purchase solar panels if you want to go solar?

There are several paths to finance your solar system, and it is certainly up to you which way to choose. The most obvious option is to buy photovoltaic equipment and become an owner of a solar system. You can purchase solar panels either outright with cash or through a loan. If your cash savings are not enough, you can take out a loan with a third-party financing company – there are a lot of such loan providers available in the United States. However, like with a home mortgage or any auto loan, the lender will add some interest to your loan principal. This cost will vary depending on factors such as the term of the loan or your credit score.

For those not willing to purchase solar panels, another option is a lease. It is similar to a loan in that no down payment is required, but there are key differences between the two. Let's take a closer look.

How does a solar lease work?

To start, let's examine the concept of solar system lease. Basically, a solar company, the owner of a photovoltaic system, installs solar panels on your house’s roof. Once the system is installed, the electricity produced by your PV modules is yours to use, and you'll be required to pay a fee to your solar developer on a monthly basis. Usually, your fee will be lower than your electricity bill before installing a PV system.

A solar lease should not be confused with a solar power purchase agreement, otherwise known as solar PPA. Despite some similarities, there are notable differences to be aware of. With a solar PPA, your monthly payment to the provider will depend on the amount of electricity your PV system generates. At the same time, the monthly fee will be the same regardless of solar power production.

As for the terms, solar leasing typically lasts between 20 and 25 years, which is about the standard lifespan of photovoltaic modules. Some companies can also offer additional opportunities for advanced services, such as smart monitoring programs, so that you can track the performance of your solar equipment. The solar provider will be monitoring your system as well to ensure that it is operating properly. Finally, be aware that solar leases usually contain an annual payment escalator clause ranging from 1% to 5% monthly due to inflated electricity rates.

Solar panel lease cost: some ballpark estimates

How much does it cost to lease solar panels? The price range we will give you is just meant to be a rough overview because the cost of leasing solar panels is determined by numerous factors, including your location, energy consumption, the solar company you enter into an agreement with, and your credit score. The solar panel lease costs range between $50 and $250 per month. While some companies require a down payment, many allow you to start with a $0-down agreement.

Advantages and disadvantages of solar lease

You might be wondering if a solar system lease is truly worth it. Let’s look in-depth at the pros and cons of renting vs. owning photovoltaic modules.

On the one hand, there are some apparent positive sides of solar leasing:

  • Low or even zero upfront costs. You won’t need a considerable sum of money set aside to install a photovoltaic setup. Leasing makes solar more affordable upfront.
  • No need to worry about maintenance. If there are any issues with your PV equipment, your lease company will typically be responsible for repair activities.
  • A potential benefit for those who plan to move. You can negotiate with the solar developer to only pay your lease up until you leave.

On the other hand, here are some drawbacks of PV leasing that should be outlined:

  • As electricity rates constantly increase across the country, the solar panel lease cost also increases annually, making it difficult to calculate future expenses accurately.
  • If you compare the cost of leasing solar panels to the price you need to pay when you purchase solar equipment, you’ll likely end up paying more with a lease. This is partly because, while not being an owner, you won’t be eligible for the Federal Tax Credit, which is currently 30% of the initial cost of your PV system, as well as for any other local and state incentives available in many locations.
  • A photovoltaic system won’t increase your property’s value because you do not own it.
  • If you decide to sell your house, terminating your agreement with the solar developer could complicate matters. Some buyers may not want to pay for a photovoltaic system, potentially making it harder for you to sell your home.

Solar leasing options: best solar providers to consider

Many companies offer solar panels for lease. One of them is SunPower, one of the top solar panel producers. Their lease comes with a 25-year performance guarantee and the option to transfer it if the customer moves. Those who enroll in the plan have the choice to buy the system later on.

Another company that excels in solar leasing is Sunrun. They provide two options: a monthly and a full lease. The monthly plan requires a low initial payment starting from $0, depending on your credit score, and includes rate-hike protection to keep your monthly payment steady. On the other hand, full leasing allows you to pay for 25 years of energy costs upfront for long-term savings on your utility bills.

One alternative to traditional leasing models is a rental program by Tesla. It reflects Tesla's return to its SolarCity beginnings, as the company was primarily focused on leasing when Tesla acquired it in 2016. This offering stands out for its flexibility - you're not locked into a long-term contract. If you decide you no longer want the solar panels, simply contact Tesla, and they'll take care of it with no cancellation fees.

Is buying a solar system a better solar choice?

To sum it up, a cleaning of solar system lease may be a budget-friendly option for those who can't afford to purchase solar panels outright. But in the long run, it might not be the most cost efficient choice. It's important to thoroughly weigh the advantages and disadvantages of a solar lease and factor in all the financial aspects before making a final decision.

Mar 30, 2023

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