Leasing solar panels has become a common way to finance renewable energy projects. This method allows individuals or businesses to lease solar panels at a low cost, and then pay back the loan over time.
Solar power is becoming more affordable every year. In fact, leasing solar panels is now a viable option for homeowners who want to install solar panels without having to purchase them outright.
However, there are some drawbacks to leasing solar panels. For example, you might not get the same amount of electricity from your system as someone who owns their own solar panel.
Also, you won’t be able to sell the extra electricity you produce during times of high demand.
Let’s take a deeper look into both the pros and cons of leasing solar panels out.
What Is A Solar Panel?
A solar panel is an electrical device that converts sunlight directly into electricity. It consists of photovoltaic cells (also called solar cells) which convert light energy into direct current.
The output voltage can vary between 12V and 24V depending on how many photovoltaic cells are used in each panel.
There are two main types of solar panels: monocrystalline silicon and polycrystalline silicon.
Monocrystalline silicon panels tend to be more expensive than polycrystalline silicon panels because they’re made with higher-quality materials. However, they also have better efficiency ratings.
The most popular type of solar panel today is the polycrystalline silicon panel.
These panels use less material than monocrystalline panels, so they’re cheaper to make. They also have lower efficiencies than monocrystalline silicon panels.
Solar panels are placed on roofs or around properties to power them through the energy they have collected through the daytime (provided it’s sunny).
You can save an impressive amount on your energy bills by using solar panels, but the upfront cost is often what makes people so hesitant to get them. That’s where solar panel leasing comes in.
What Is Solar Panel Leasing?
Solar panel leasing is when companies offer customers the chance to lease solar panels instead of buying them outright.
As long as you pay off the lease within the agreed upon timeframe, you don’t need to worry about any additional payments.
With this kind of financing, you’ll only pay for the energy produced by your solar panels. If you decide to stop paying, you simply return the equipment to the company.
This allows you to use the energy created from the solar panels without having to worry about paying maintenance costs.
If you find that they aren’t fulfilling your wishes enough, you can simply send them back.
The Pros And Cons Of Solar Panel Leasing
Now that we know what solar panels and solar panel leasing is, we can look at the benefits and drawbacks of such a system.
Here we have a list of the pros and cons, which should hopefully help you in deciding whether solar panel leasing is the correct thing for you to do.
Pros Of Solar Panel Leasing
There are several reasons why people choose to lease solar panels rather than buy them outright. Some of these include:
Lower Initial Investment
When you lease solar panels, you don’t need a large down payment.
This ensures that there is no big first payment for you to pay to an energy company. Solar panels can cost at least $30,000, although some are cheaper at between $1,900 and $13,600.
Either way, the average cost of a solar panel is $7,750. You’ll probably need around 10 to 20 solar panels to cover the costs of the energy bill your household uses, meaning that you’ll be looking at an investment of between $70,000 and $150,000 to buy your solar panels outright.
This is an incredibly high starting cost for solar panels, and one that many households cannot afford to make.
The price of leasing solar panels is often $0 for the startup costs. When looking for a budget-friendly option, leasing is the way to go.
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No Maintenance Costs
One of the biggest problems with owning solar panels is maintaining them. A purchased solar panel might have a number of warranties on it, such as a performance warranty, a manufacturer warranty, and a workmanship warranty.
These will help to some extent, but once the warranties have expired, you’re on your own.
However, if you lease solar panels, then you won’t have to worry about maintenance costs. Your panels will last much longer, and you won’t have to replace them every year.
Some leasing companies offer free maintenance, installation, warranties, and monitoring to make the cost even easier on you.
When you own a solar panel, you can often spend up to $1,225 on repairs alone. As long as you choose the right solar panel leasing company, you might not have to worry about this additional cost at all.
Flexible Repayment Terms
With solar panel leasing, you can set up a flexible schedule that works best for you.
Most leasing companies allow you to repay over a period of time, or you can opt for monthly payments instead. In addition, most leasing companies also offer a low interest rate.
If you want to get a loan to finance your purchase, you may have to pay higher interest rates.
However, when you lease solar panels, the money you save on interest means more money left over to invest elsewhere.
Once your leasing contract is over, most companies also give you the opportunity to buy your solar panels at a reduced rate.
So, you’ll be able to enjoy lower costs for longer before owning the solar panels yourself. If you don’t want to purchase them, you can either restart a new lease or send them back.
Cons Of Solar Panel Leasing
While solar panel leasing has its advantages, it does come with a few downsides too. Here’s what you should know:
While most leasing companies do provide a limited warranty, it isn’t always enough to protect your investment.
For example, if your panels break during normal use, you could be out of luck. It’s important to check the fine print in any leasing agreement to find out how much protection they offer.
We mentioned earlier that some good leasing companies offer free maintenance and warranties to you. However, this is not all companies.
If you choose the wrong one, you might be stuck paying these additional fees and spending more than you had hoped on your leased solar panels.
Higher Overall Cost
With solar panel leasing, you usually have to commit to a minimum term. Once the term is complete, you must continue to pay the same amount each month until the end of the contract.
Just like renting a house rather than buying one, your upfront costs will be cheaper but the longer you rent, the more money you will spend.
Soon enough you will have spent more on the leased solar panels than it would cost to purchase new ones, without the pride of owning your own solar panels.
This is why solar panel leasing can sometimes be more expensive than buying your own panels outright.
You are committing to a certain amount of energy production, so you need to factor that into your decision.
No Investment Tax Credit (ITC) Or Rebates
The federal government offers an ITC tax credit for those who purchase their solar panels. The ITC helps offset the cost of purchasing solar panels by reducing your taxes.
This makes it easier to afford solar panels. The Federal Government offers a 30% tax credit for people who have installed energy-efficient products in their homes, such as solar panels.
However, if you lease solar panels, there is no ITC. That means you won’t receive a tax deduction for the initial cost of installing solar panels.
Solar panel leasing is a great way to cut down on your monthly payments while still having access to the benefits of renewable energy.
But, just because you’re leasing doesn’t mean you can’t benefit from other incentives offered by the government.
Make sure you understand the pros and cons of leasing solar panels before committing to this big decision.
If you decide to go with leasing, make sure you get a company that provides good customer service and a long warranty by asking them the right questions.
Also, look for a company that offers financial assistance programs to help reduce the overall cost of installation.