Solar energy is a great way to lower your home’s monthly utility costs. The average home in the U.S. can expect monthly savings of $60 to $140 or so, depending on the state and size of home. You have options for securing solar panel systems, too, mainly buying it outright or leasing solar panels.
Is it better to lease a solar panel system or to buy it? That’s a calculation that needs to be done by the homeowner as it will change according to your situation. Leasing tends to be a popular choice, but there are good and bad things about it. Here are the pros and cons of leasing a solar panel system.
Pros of Leasing Solar Panels
Of course, one of the best things about solar energy is that it’s “green.” No emissions are produced from solar panels, but what benefits are there to you as a homeowner to lease a solar system?
1. You Don’t Have to Pay Up Front
A system that can power your home either partially or completely can run anywhere from $10,000 to $30,000, perhaps more. Instead of paying out a huge lump sum, leasing lets you keep your money on hand. Whether you use it for an investment, a much-needed vehicle, or expenses like home insurance or a credit card, you can put your money to good use otherwise.
2. Repairs Are Part of the Agreement
Like a new car warranty that doesn’t expire, you don’t have to pay for repairs on a leased solar panel array, at least not for most cases. The monthly charge you pay typically includes any upkeep, maintenance, and repairs, ensuring that you have a fixed cost for the system.
3. Your Electric Utility Cost is Fixed
Rather than an up-and-down electric bill when you’re drawing only from the grid, a solar panel system has fixed costs. In most cases, your leased panels can produce enough juice to power your home, or at least close to it. You might even have the ability to sell excess electricity to the power company as a bonus.
Cons of Leasing Solar Panels
It isn’t all roses to lease a solar panel array. Signing up for a system without looking closely at the costs may lead to heartache down the road.
1. Tax Credits May Be Unavailable
For most applicants, federal and state tax credits are available for solar panels that are purchased or financed, like the 26% federal credit for systems installed in 2020 from the U.S. Department of Energy. But if you’re leasing a system, those tax credits often disappear. And unlike a system that’s purchased, your payments will never end, so you may even pay more in the long run and get less overall benefit.
2. A Lease Could Make Your Home Harder to Sell
With an added monthly expense and no end in sight, leasing solar panels can be scary for home buyers looking at your house. Even though it could be to their benefit that there are solar panels installed, the lease transfer and pre-arranged agreement could be tough to swallow.
3. It Can Affect Your Ability to Borrow Money
If you’ve leased the solar panels, it’s likely to show up on your credit report as a financial obligation. At minimum, you’ll need to account for it when a lender is determining whether you have the capacity to [borrow money on amortgage, personal loan, or a credit card. Depending on how much your lease payment is, you might be restricted on how much credit you have accessible.