Blog Post: Going Solar: Lease or Buy?

So you have decided to make the move and install a solar electric system on your home or business.  It is a great decision since it will definitely reduce your monthly electric bill and it will displace literally tons of carbon from being introduced into the atmosphere.

But what makes more sense, to buy the system or to lease it?

PURCHASING THE SYSTEM means that you will have to pay for the installation, out of pocket, and the systems can be rather pricey. When when you buy, you will get the cash rebate incentives from the utility company, and you can take advantage of the 30 percent tax credit offered by the federal government. 

The system will usually pay for itself within 5-10 years, so after that point, it is really making you a return on the investment. Solar electric panels have a life of up to 40 years or more. They lose about one-half percent of efficiency per year, so at the end of 20 years, they will still be producing about 90 percent of their original output. This longevity can really compound your utility savings over the years. As far a maintenance, there is none since there are no moving parts.

LEASING A SYSTEM means that you will not have to pay any money upfront.  However, you will not own the system; the leasing party will own it, and you will be buying the electricity from them each month, usually at a slightly reduced rate than the utility company.

At the end of the lease, you will have the opportunity to purchase the system at “fair market value,” whatever that will be. The onus for maintenance and repair is on the system owner (the leasing party), and the systems usually come with a production guarantee. That is to say that the system owner will pay you for underproduction. A lease can also be pre-paid (paying all of the 20 years of projected production payments up front), which will eliminate the monthly payment. 

SO NOW WHAT? If you have the money or if you can borrow the money, it is my belief that purchasing the system is more advantageous. Leasing involves a “middle man,” who is obviously making money on the deal. The pre-paid cost of the lease is typically the same amount as the purchase amount, after the cash rebate. And with the purchase, you will also get to take advantage of the tax credit. However, if you do not have cash to buy a system, or you don’t need the tax credit, then leasing is a great answer.