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Exploring Solar Leasing: Simplify Your Transition To Solar Energy

Do you want to go solar but the high cost of installation is resisting you? Solar leasing is an opportunity to get all the advantages of solar power while making no large initial investments. A solar lease is cheaper than a PV installation because it offers a means of using clean electricity to power your home at a fixed monthly rate. With this option, you can finance the solar panels without breaking the bank

Spencer Fields, said, “In the right situation, solar lease can be a good way to help lower your electricity bill. But it’s important to do your research and go into any lease agreement with open eyes.

In this article, we will explore the concept of solar leasing, how it works, and most importantly if lease is right for you.

What is a solar lease?

In a solar lease, you agree to pay the third-party owner a fixed monthly lease fee to use the energy system, installed by the owner. This fee is usually low compared to your energy bills, so you can switch to clean energy. This trend is gaining popularity because it allows many people to move to clean power without buying PV panels. However, it is only the leasing company that will utilize the tax credits and state solar incentives.

Also, you will be able to purchase panels after the expiry of your leasing period. It is possible to buy your system directly from your provider at a retail price but this is not the best financial option because you will probably have to pay extra fees. In addition, you will have to pay high early termination costs if you want to break your lease early, which will offset any initial savings from switching to solar power.

How does solar leasing work?

This financing option enables homeowners to have panels on their roofs at minimal or no cost. However, they only pay a regular monthly fee. Lease agreements typically last 20-25 years and include a price escalator that can increase payments by 1-5% annually. For several years, many people have opted for a leased system, but as the cost of installation is decreasing, many people are opting to buy the system with cash or other flexible financing options.

What are the advantages of leasing solar?

You do not need to pay for the high upfront cost of buying and installing a PV system. This makes clean energy accessible to people who may not be able to afford to invest money in buying panels.
As you are not the owner of the system, you are not responsible for any maintenance or repair. The leasing company will handle the repair of the leased PV system. This means that you can get advantages without having to bear additional costs.
Without solar, your monthly bills may fluctuate but if you are utilizing solar power, you pay a fixed monthly payment in solar leasing.
Since you only pay a lease often less than your energy bill, you begin saving immediately.

What are the disadvantages?

Solar leasing does not add any value to your home mainly because the panels do not remain with the home upon sale. It’s also important to keep in mind that such systems may make selling a home more difficult if potential homebuyers don’t want to use solar panels.
Solar panels are cheaper than electricity and other power sources, but leasing panels does not afford the same long-term savings as buying the best solar panels Also, there are no tax breaks or incentives offered by the local or state government that comes with leasing. Any tax breaks offered go to the solar developer, not the homeowner.

Comparing Solar Leasing with Other Financing Options

The two other common ways to finance solar are compared as follows:

Solar Leases vs. Power Purchase Agreements

PPAs, purchase power agreements, and solar leases are often considered quite similar! Both of these types of financing are closely related. The main difference is that a solar PPA enables you to buy the electricity generated by the solar system at a fixed rate per kilowatt-hour (kWh), while a solar lease comes with a monthly fee.

Also, another difference is that the monthly payments that you will make over the term of the lease are also constant. However, the monthly charge with a PPA depends on the electricity consumed and it may vary every month. Thus, if a fixed monthly payment suits your financial plans, then lease is more suitable for you than a PPA.

Solar Leases vs. Loans

Under a solar lease, you must pay monthly fees to use the system that is owned by the leasing firm. Although there are no upfront costs, there may be annual fee increases. On the other hand, whereas loans require an initial investment, they ultimately yield greater financial returns.

Whether to lease or loan, depends on your financial situation, long-term plans, and preference for ownership versus lower initial costs.

Solar leasing is a good way for homeowners and businesses who prefer shifting to solar energy without paying a large amount of money for installation. By simplifying the process and providing predictable monthly payments, solar leasing makes renewable energy more accessible. By understanding the leasing process, and evaluating financial implications, you can make an informed decision.

If you are looking for solar financing options, SolarSME is here to help. Our energy experts assist you in making a suitable choice for your budget and needs. Book your consultation or get a FREE quote with our solar calculator.

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