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Pros and Cons of a Solar Panel Lease

solar leasing solar panel financing leaseThe concept of “leasing,” whether you’re talking about cars or a solar PV array, sometimes gets a bad rep in financial circles. When I leased my car, it turned out to be a very smart move. Even though I’ll have nothing to show for my payments at the end of three years, the peace of mind and convenience was worth it to me. If I had to buy a car, it would have been an older model, and who knows how much I would have ultimately spent in repairs and wasted time?

When people hear the term “solar lease,” they often equate it to to leasing a car or to renting virtually anything. A  solar lease shares some similarities with these two financial decisions, but when you run the numbers, a solar lease makes sense for almost anybody. Let’s consider the pros and cons:

Solar Leasing PROS:

You don’t have to worry about maintenance or emergency repair costs on your panels. Your solar leasing company owns the panels; it is not your headache or responsibility if something goes wrong.

With some programs, you won’t have to pay any money down. If you don’t have $5,000 or more sitting around to pay for your solar PV installation, a solar lease lets you start reaping the benefits, and cost-savings, of solar immediately with no strain on your pocketbook.

A solar lease has flexible payment options. You can reduce your monthly payments by putting money down. And if you happen to come in to a lot of cash, you can pre-pay the entire lease and have one less bill to pay every month!

Solar Leasing CONS:

You may not qualify for a solar lease if you don’t have excellent credit. A solar lease is not for everyone just because, as with most leases, good credit is required to qualify.

Your solar PV installation won’t be fully paid off immediately, so you won’t enjoy “net zero” electric bills right away. Your solar lease payments will still be lower than what you were paying for electricity! (And, in many cases, your solar lease company guarantees it!)

A solar lease adds another layer of administration to selling your home. You have options when you sell your home, even in the midst of a solar lease. You can transfer the lease to the buyer, buy the system outright and include the cost in your home’s sale price, or have your solar PV array transferred (at your cost) to your new home within the same utility region. The third option is not likely to be desirable or practical, but the others simply hinge on finding a buyer who understands the value and cost savings of solar energy. With all your electric bills and lease payments as proof, this should be an easy sell!

Post Written by
A full-time freelance writer, Dawn frequently covers energy efficiency, green living, and topics like LED lighting and whole home control systems for a number of blogs and technology trade magazines. Dawn is proud to live in New York as the state vies to beat out New Jersey as the East coast top dog of solar energy and is waiting for the Solar Renewable Energy Certificate legislation to pass before installing solar panels on her Long Island home.

3 Comments

  1. Sean says:

    Nice article Dawn. One issue that we run into all the time is homeowners thinking that leasing is only a backup option if they cannot afford to purchase.

    In reality, leasing can actually provide better returns than a purchase, especially when down payments are included.

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  3. Ron Winton says:

    A solar lease might have made sense 2 years ago but now that zero down solar loans are available instead of leases, and now that prices have dropped to historic levels, a solar lease in most cases make absolutely no financial sense. First of all the leasing company will take your 30% federal tax credit which is worth thousands and they’ll take any other available financial incentives. After you factor in your lease payment, in most cases you will only be saving about 10 to 15% on your electric bill. And what homebuyer will want to assume your lease payments on your used solar system, using outdated technology, when they can buy a brand new solar system with a $0 down loan for so much less. Over the past year, prices for purchasing a professionally installed solar system have literally dropped to less than 1/3 the cost of what you will pay in leasing payments. A complete kit of brand name materials that any handy per can install themselves sells for less than $1.68 a watt today. A lease might make sense if you can’t use the 30% federal tax credit but other than that, a solar lease when compared to an FHA $0 down solar loan with its less stringent credit requirements, makes aboslutely no sense in today’s market.


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