Leasing vs Buying Solar Panels: What You Need to Know

Is It Better to Buy or Lease Solar Panels?

The main difference between solar leasing vs buying is money: upfront costs vs long-term savings. Whichever route you ultimately choose, you should understand exactly how much you will be paying over the lifetime of your panels.

If you have already gotten quotes, are they for purchasing a solar power system outright? Or are those prices for a monthly solar rental? Do you know?

If you’re not sure, ask the solar companies these questions to help you determine if they are pitching you a purchase or a lease:

• Will I qualify for any local or state incentives?
• How much will I pay in total over the lifespan of the panels?
• What happens if I choose to sell my home? Will the new homeowner incur any financial responsibility?

Let’s discuss the differences between buying and leasing solar by looking at pros and cons of each decision.

What Is the Difference Between Leasing and Buying Solar Panels?

Pros of Leasing Solar Panels

• No money required upfront. This is the primary benefit of leasing solar panels and makes it appealing for someone who doesn’t have a lot of cash on hand, or doesn’t want to finance a purchase.
• Maintenance included. A perceived benefit is that maintenance is included when you lease solar panels. This is a bit of a stretch, though, because solar panels technically require very little, if any, maintenance. You will also find that most potential issues are covered under the company’s warranties.

Cons of Leasing Solar Panels

• You may have trouble selling your house. If you choose to sell, the new owner is required to take over the lease. If they don’t want to do so, you may find yourself not only paying off the lease in full but also paying to have the panels removed. There’s a lot more involved when trying to sell your house with a solar lease.
• Escalating Pricing. In order to understand the true cost of your system, you need to do the math and figure out your total investment in the long run. Did you know that your monthly lease payment will go up about 3% per year? It is not a fixed rate. Prior to purchasing, you need to determine the total cost over the full term of your lease agreement and factor in the 3% annual escalation rate. While you may be avoiding the upfront costs, you will pay more in the long term. After you do the math and account for escalation, this becomes apparent.
• Minimal Savings. The savings on your electricity bill are minimal. Once you pay the solar company for your monthly lease, you typically only save 10% on energy bills.
• You do not qualify for financial incentives. There are generous rebates and incentives available in Illinois. When you lease, those incentives go to the solar company, and you miss out on these savings directly.

Pros of Buying Solar Panels

• Spend less money in the long run. While some may balk at the initial cost of buying solar, you will spend less money in the long run. We give a sample cost breakdown of in this article.
• Qualify for rebates and incentives. These can lower the purchase price considerably. In the Rockford area, solar rebates and incentives are covering an average of 60-80% of the purchase price for homeowners right now. That is an incredible savings!
• Quick payback time. The average homeowner is seeing a payback time of only 2-4 years, depending on their energy usage. Once your solar system is paid off, you bank all the savings from your electric bill.

• Easy financing and manageable payments. For example, Iconic Energy suggests flexible solar panel financing through recommended lenders offering no money down financing. Within the time you finance, you could receive incentives you qualify for, such as SREC money in Illinois. That means you only have to come up with the difference.
• Raise the value of your property. Installing solar that you own raises the value of your home by approximately 4-6%. As more and more people are making the switch to renewable energy, having a house that runs on solar will increase resale value in the eyes of prospective buyers.
• Selling your home is easier. There is no financial responsibility required of the buyer if you own the solar panels. This is not the case with leasing (further explained in the ”Cons of Leasing” list above.)
• Long warranties. When you buy solar with Iconic Energy, you will receive some of the best warranties in the industry: 25 years on panels, 25 years on installation (warranty against leaks), and 25 years on wiring. (For reference, the average warranty offered on installation is 5-10 years.)
• Local, accessible support. Iconic Energy is a local solar panel installer that stands behind the warranties and will be easily accessible should there be any issues. Don’t be stuck struggling to schedule a service call with a national company if any issues arise.

Cons of Buying Solar Panels

• Solar panels cost money. This upfront cost may scare some away from purchasing their own solar system. But remember: up front costs are reduced by rebates and state incentives, so may not be as high as you think. 
• Minor increase in homeowner’s insurance. Usually the increase is minimal; we find the average increase to be about $25 per year. This depends on your insurance company and the type of installation being done. If you are concerned, we recommend you check with your insurance adjuster directly for the most accurate answer.

Why You Should (Almost Always) Buy Solar Panels

Reading through this article, you will most likely agree that buying your own solar panels is a much smarter course to take. You have more options and ultimately save more money.

But what if you absolutely don’t have the money to purchase solar and don’t want to finance it or take out a solar loan? In that case, leasing may be a better option for you. Here are some final things to consider before signing a lease.

Be sure to look carefully at your leasing proposal. Remember that after paying the lease, you will only be saving about 10% per month on electricity. Even this is not guaranteed, as it depends on your system’s production.

If that is all you plan to save, you may prefer to use community solar. Community solar is becoming more widely available, is free to join, and has the added benefit of not being tied to anything. This option may also be good for people who live in apartments or densely wooded areas, as the panels are not installed on your own property.

If at all possible, we recommend purchasing your own solar panels. You will find you have a much better return on investment and more flexibility than you would through leasing or community solar.

Are you ready to make the switch to solar? We invite you to visit our website for a free solar quote and a 3D rendering of your space, complete with sun and shading analysis.

If you would like answers to frequently asked questions regarding solar panels, please visit our FAQ page or contact us directly. Let us show you why it makes dollars and cents to go solar!