Should I Purchase or Lease My Solar System

Once you decide to install a solar panel system on the rooftop of your office or your house, you need to decide if you are going to buy your system in full or lease your solar system. The decision of solar financing depends on what your financial goals are. Everyone’s budget and financial goals are different. Here are some ideas to help you brainstorm how to lease or purchase your solar panel system.

Price of a Solar Panel System

The cost of solar depends on which federal and state tax incentives are available in your country and in your state. The Solar Incentive Tax Credit, (ITC) which is a federal tax credit available to all Americans, will end in 2021. Currently, the program grants a 30% tax credit to residences and businesses that install solar energy. Your state may also suggest appealing incentives to offset the cost of installing solar in your home or business. Typically, the rebates and tax credits can cancel out the cost of installation by up to 50%. They do this by reducing the amount you pay for federal and state taxes, and if the price you get off your tax credit is more than the bill itself, you can use it the following year, as well. You can either lower your withholding or request the credit when you file your next return.

If you decide to lease your solar system, you do will not qualify for these tax credits, incentives, rebates, or depreciation. But you probably won’t have any upfront costs. It will be more like renting a car, where you’ll only have a monthly payment to the solar company. Sometimes, a solar lease may make it more challenging to sell your house if the new buyer does not want to take on the burden of the lease.

Buying your solar system allows you to purchase it with cash or finance with a solar loan. There are programs, like PACE, put forward through an individual state, that fund your project and let you pay it off in your property taxes. Plus, businesses can utilize tax benefits by treating the solar system as a depreciable asset. If you own a home or are a property owner interested in installing solar, you can grow the property’s value swiftly if you intend to sell it in a few years. It is a smart plan to buy a solar system if a homeowner or business wants to maximize their profits by investing in a solar system.

Maintaining Your Solar System

If you are leasing your solar panel system, the solar leasing company prolongs the life of and possesses the system. If you own your solar system, then you are accountable for the maintenance and the responsibility of keeping it going throughout its life cycle. But the solar panels and inverters are very reliable, sturdy, and long-lasting, and they do not require a whole lot of maintenance. Also, most solar panels come with warranties that average out around 25 years that you can use if anything strange does happen. And the solar inverters also often come with warranties that average out around 15 years.

ROI and Savings

With a leased solar system, you will save anywhere from 10 all the way up to 50% on your electricity bill, though the total amount of savings you’ll get depends on where you live, what your property is like, and what state incentives are available to you. Whether your solar system is bought or paid back through a lease, you have the ability to make an annual Return on Investment (ROI) of 10-30%. What this means is essentially that your electricity will be free for 25-40 years (depending on the life cycle of your particular system). No matter what choice you decide is right for you, solar energy is always the best choice.

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