What Makes Sense for You? Leasing or Owning Solar for Your Home
Thinking about investing in solar panels for your home? That’s great news! More and more homeowners are considering buying or leasing rooftop solar panels because of their cost savings and energy efficiency, especially those living in PG&E territory in Northern California. By the year 2020, the U.S. Department of Energy projects that 900,000 homes will feature solar installations.
For most people, the best ways to pay for your panels are by cash, a home equity loan, or a specialized solar loan. Depending on the size of your solar panel system and the orientation of your roof, the cost of your system may range anywhere from $15,000 to $35,000 after tax credits. There are pros and cons to both owning your system or leasing; this article attempts to give you balanced view so you can make the right decision based on your specific situation. Before deciding on whether leasing or owning solar for your home, assess your needs, do your research (check online reviews!) and consider getting a few quotes to maximize your benefits.
Is Leasing a Solar Panel System Right for Me?
Pros: Leases allow for you to significantly lower your short-term monthly energy costs. This method puts solar panels on your home and start saving right away, usually for $0 down. You can choose a solar lease or a power purchase agreement, PPA, that allows you to pay a leasing company for the specific equipment needed for the system. You pay a leasing company for the amount of energy you use, or the PPA lets you pay for the power you consume at a set price per kilowatt hour. At the end of your lease, you can purchase the solar energy system at a depreciated market value, or sometimes at a discounted price, depending on the terms of your lease.
Cons: Solar leases or PPAs typically last 20 years or sometimes longer. Owning your own solar panels usually qualifies you for various tax credits and rebates. If you lease your system however, the leasing company gets to enjoy those benefits - not you. As with anything, there are hidden costs. Leasing solar panels aren’t free from obscure or unexpected costs. Depending on your homeowner's insurance policy, installing solar panels on your roof could leave you with a higher insurance premium. In the case of roof damage, you may be liable for any necessary rebuilding or restoration. Many leases contain escalator clause that can further reduce savings by increasing payments 3 percent per year; if the cost of energy doesn’t rise as quickly as the contracted lease payments increase, your savings could evaporate. Equipment problems aren’t covered by a maintenance plan, they’re covered by warranty. (If a storm destroys your panels, the damage may be covered by your homeowner's insurance.) People who lease their solar systems miss out on federal tax benefits and local incentives which can save a lot on the cost of the system. Additionally, and this is a big one, if you plan on selling your home during the next 20 years, the buyer may require you to pay the remainder of the lease payments before the sale is complete. Just do a quick search on Google to read some of these horror stories.
Should I Own My Solar Panel System Outright?
Pros: Solar panels can pay for themselves. The length of time it takes for that to happen depends on your energy usage and how much you pay for your solar energy system, but in Northern California and PG & E territory, you will likely be able to recoup your investment within 3-7 years. Buyers tend to pay more for houses with owned solar panel systems; you can increase your home’s value. In reality, for almost every homeowner owning their system is the best choice. Overall, you are able to take advantage of tax incentives, add value to your home and become energy independent.
Cons: Positive returns will take some time, in in Northern California and PG & E territory around 3-5 years. Maintenance and replacement can be a consideration, however since solar panels have no moving parts they are quite sturdy. Most manufacturers offer warranties of 20 to 25 for solar panels and 10 years for solar inverters. Ultimately, the disadvantages of buying solar panels are similar to the disadvantages of other investments with high up-front costs. To get in the game, you have to part with a lot of cash and wait a few years for the system to be paid off.
Are You Considering Solar for Your Home or Business?
If you are located in Northern California or Central California, All On Electric & Solar experts are here for you. We will walk you through the process with no pressure, giving you the best solution for your energy usage and financial situation. You can start reducing your electricity bill and producing your own renewable energy by installing solar panels for your home or business. Knowing your options can save you thousands on unnecessary equipment and allow you to make the right decision. Let us help you make the right decision for you.