Should I Buy My Solar Panels? | Solar.com

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Should I Buy My Solar Panels?


You are already aware of all of the reasons why you should go solar, so the next question is how do you pay for it? There are a few different ways you can go solar, and the biggest decision you have to make is between ownership of your system and leasing.

So what is the difference between the two, and which route should you take? Let’s get into the details.

What Is Ownership?

Ownership of the system is when you purchase your solar panels outright with cash, or you finance the system and pay it off with a loan.

When you lease a system or go with a power purchase agreement (PPA), the solar company you are leasing from owns the solar panels and finances the installation. With a lease, you are renting the equipment and will pay a fixed monthly payment to the solar company for a period of 10-20 years. With a power purchase agreement, you’ll be purchasing the energy that is produced by the system. This means your payments will vary month to month, as system production varies seasonally.

Now let’s get into some reasons why you should purchase or lease your solar panels.

The Solar Investment Tax Credit

The government incentivizes people to go solar through the Solar Investment Tax Credit. The tax credit is 30% of the overall gross system cost which includes any upgrades needed to go solar such as the main panel upgrade, or re-roofing work (for the portion of the roof your panels will go on).

Let’s say your solar system costs roughly $20,000. You’ll receive $6,000 in the form of a federal tax credit. This makes the net cost of the system only $14,000! This is a huge chunk of your system paid for by the federal government. If your state has a tax credit as well or rebates available within your utility provider or city, it gets even better.

So What’s The Catch?

You are only eligible for the Solar Tax Credit if you purchase your solar panels, either through a loan or with cash. Other qualifications include having a federal tax liability. If you lease your panels, you will not be able to claim that tax credit. The solar company who owns your panels will take it from you.

There are certain scenarios in which it might make more sense for you to go with a lease or a PPA when you can’t claim the tax credit. For example, if you are retired and don’t have a tax liability, you may not be able to take advantage of the Solar Tax Credit. For this reason, a solar lease or PPA might be a good option for you! If you’re looking for short term savings on your electricity bills, a lease or PPA can usually give you a lower payment and allow you to enjoy some savings as well as the benefits of producing clean energy.

Increase Your Lifetime Savings

Over the course of your system’s lifetime, you will save money with solar from avoided utility payments. How much depends on a variety of factors like your zip code, energy usage, and more than you can learn about here. If you own your solar panels, you’ll see more savings over the lifetime of the solar system than you would with a lease or PPA.

If you purchase outright, the typical return on investment can range anywhere from 5-10 years and you’ll be generating your own clean energy on day one. There are options to finance the system through a home equity line of credit as well if you want to take advantage of the cash price. Solar loan terms can range between 8-20 years, and as soon as the loan is paid off your system will be producing clean energy for free!

With a lease or PPA, you’ll be paying a solar payment for the next 10-20 years. Some leases or PPA’s also have escalator rates attached, where they will raise their prices in increments every year over the course of the agreement.

If you’re going to make a monthly payment, it definitely is beneficial to pay off an asset. With a loan, you can pay off the system on your terms while reducing/eliminating your electricity bill and adding value to your home.

Solar Panel Maintenance 

Your solar lease or PPA will last between 10-20 years, at which point you have the option to buy the system outright or the panels will be removed from your home. When you lease your solar panels the company who owns your panels will also take care of the maintenance of the system. Sounds like a great perk! Luckily for you, solar systems don’t really require much maintenance. clean-solar-panels.jpg

A solar energy system is a passive energy generator. This means it doesn’t have any moving parts, resulting in little need for upkeep. Google in fact recently conducted a study at their headquarters on solar panel maintenance. They found that tilted solar panels (like the ones you’ll have on your roof) just need a regular rainfall now or snow and then to clean them sufficiently.

Beyond cleaning the panels, if there is a problem with the equipment you’ll find peace of mind through warranties offered both by your installation company and equipment manufacturer. Typically your panels and inverter(s) are warranted by their manufacturer anywhere from 10-25 years. On top of this installation, companies offer workmanship warranties which cover the labor costs for them to come out and service your system if the equipment needs replacing. Workmanship warranties will last anywhere from 5-25 years depending on the company and location in the country.

Picking the right company with the right warranties for your solar installation is very important! This is why Solar.com only accepts on average 30% of installers per region on our platform and puts them through an extensive vetting process to make sure you’re covered with the right warranties. If you’d like to check out the Solar.com Certified installation companies in your area, search here!

What If I Sell My Home?

If you’re thinking about selling your home after going solar and aren’t sure of whether you will see the benefits of ownership, think again!

When your home has solar panels it truly adds value to your home. Berkeley’s Lawrence Lab conducted a study in which they found homes with solar sell faster, and at a higher value. The added value of a solar system comes out to about $4/watt! For an average 5kW system, that comes out to $20,000!

Even if you are in the process of paying off a solar loan, there are simple ways to transfer the payments to a new owner or buy the loan out at sale of the home. The added value can be fixed into the sale price since the system is a part of your home and will produce free electricity for decades.

With a lease or PPA, the new owner buying the home must agree to take over the agreement when they move into the home until the duration is complete.

Can I Finance Solar Panels If I Don’t Have Upfront Cash?

Don’t have the upfront cash to purchase a system outright? No problem, there are many zero down financing options with low-interest rates that make going with a solar loan an affordable option. If you suffer from high electric bills, your solar loan payment may even be lower than your electric bill! Once the loan is paid off, you’ll be producing free clean energy and saving thousands of dollars.

Most leases and PPA’s are zero down as well. If you go with a prepaid PPA, you’ll be paying an upfront price for the next 20-25 years of electricity. Since you will not get the tax credit back, the savings you’ll see will be quite less than those of a cash purchase.

If you’re able to take advantage of current solar incentives such as the Solar Tax Credit, we definitely recommend purchasing your solar system. Ownership is more beneficial to your savings and adds the most value to your home. Regardless of if you buy your system or go with a lease/PPA, you’ll still save money with solar and help reduce reliance on fossil fuel energy generation.

If you’re curious to learn more and aren’t sure if ownership or a lease is right for you, explore your options here! One of our solar experts is always available to chat and help you make the best decision for you. Please call (888) 454-9979 to get started!

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