This article is your complete guide to solar leasing! Solar leasing lets homeowners install solar panels with no upfront costs by paying a monthly fee. The leasing company covers installation and maintenance, making it an affordable way to reduce your carbon footprint. This guide will explain how solar leasing works and help you decide if it’s the right option for your home.
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What is a Solar Lease, and How Do They Work?
A solar lease is a long-term contract between a consumer and a solar panel provider. Solar leasing companies lease solar panels and charge a monthly fee for the power produced by their solar panels to the consumer. With this method, consumers can lease solar but not outright have to purchase solar panels. There is typically no down payment to get started with your lease, but consumers do have to pay a fee through their utility company to get their electricity connected to the grid. Solar leasing is a great option for homeowners who arent able to put down the costly upfront payments of owning a solar system.
How Does Leasing Solar Panels Work?
Similar to leasing a vehicle, solar leasing is an option for consumers to have solar panels, but they don’t own them. Giving you most of the benefits of solar panels but without liability for damage, repairs, or upkeep. It is a convenient option if you’re looking to explore going green but don’t have the financial means to fully purchase the panels. Keep in mind that you will still have to sign a contract that has a payment plan for your solar panels, which also includes upkeep and maintenance.
Solar Leasing Programs vs Solar Power Purchase Agreement (PPA)
Both solar leasing programs and solar power purchase agreements are ways that consumers can have solar panels but not own them. A solar lease will have a more fixed monthly rate, no matter how much energy their solar panels generate. In a PPA or Solar Power Purchase Agreement, consumers pay for the electricity generated by the solar panels per kilowatt-hour of energy.
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What are the Typical Terms of a Solar Lease Agreement?
Generally, a solar lease will span between 15 to 25 years, but the duration can be adjusted based on your contract negotiations. You’ll agree on a monthly rate for using the panels, often accompanied by an annual payment increase (escalator) to offset energy cost inflation. It’s crucial to thoroughly comprehend the terms of your solar lease agreement before siging.
How Much is a Solar Lease per Month?
On average, solar lease payments can range from around $50 to $200 per month. Keep in mind that this is just an estimate, and the actual cost may be higher or lower based on the factors mentioned above. Some companies may offer fixed monthly payments throughout the lease term, while others may have payment structures that include escalations over time. It’s important to request quotes from multiple solar leasing companies to compare their offers and find the one that best suits your needs and budget.
Ending a Solar Panel Lease
There are many different reasons a consumer would want to end a solar panel contract, especially if you are moving into a new home. There should be terms to ending your solar contract before you sign it, so make sure you are familiar with them before you sign the papers. The easiest way to end a solar lease is if you sell your house and then the new owners transfer the lease to the new owners.
While 25 years for a lease is rather long, when your term comes to an end, you can expect a few different things to happen. One, you can resign the lease or terminate the contract. If you choose to end and not renew, the solar leasing company will remove the panels from your home. Some solar companies even offer for the consumers to purchase the panels for a discounted rate.
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What are the Pros and Cons to Solar Leasing?
Leasing solar panels eliminates the high upfront cost of buying them, offering a more affordable way to go solar. Most leases include maintenance and repairs, saving you from unexpected expenses. However, leasing often involves long-term commitments and may come with rising payments over time. You might also miss out on incentives like federal tax credits, which are available to owners. It’s important to weigh the overall costs, benefits, and contract details to make the right choice for your home.
What are the pros of leasing solar panels?
- Forgo upfront costs of installing solar panels
- Fixed monthly costs for energy
- Hassle-free installment and paperwork
- Maintenance-free equipment
- Energy savings
- Reduces your carbon footprint
What are the cons of leasing solar panels?
- No federal tax incentives for having solar panels
- Poorly maintained solar panels
- At the end of the lease, you could end up paying much more than outright purchasing panels
- Breaking a solar lease can be a headache
- Leasing solar has no value to your home and can cause issues when selling
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Solar Leasing FAQ
Q: How does a solar lease differ from a solar loan?
A: A solar lease allows you to use solar panels for a monthly fee without owning them, whereas a solar loan is financing to purchase your panels. With a lease, you don’t benefit from tax credits or rebates, while a loan enables you to own the panels and claim these benefits.
Q: Can I upgrade or add more panels to my leased solar system?
A: It depends on your lease agreement. Some providers may allow upgrades or additions, but it’s important to check your contract’s terms and discuss options with your solar provider.
Q: Are there any termination fees if I want to end my solar lease early?
A: Yes, most solar leases include termination fees to compensate for the early end of the contract. The exact amount can vary, so it’s crucial to understand these terms before signing the lease.
Q: Will I still receive an electricity bill if I have leased solar panels?
A: Yes, you’ll likely receive a reduced electricity bill, as the solar panels can cover a portion of your energy use. However, if your panels don’t generate enough energy to meet your total usage, you’ll need to purchase additional electricity from the grid.
If you’re also in a deregulated energy state, make sure to make comparisons with our Electricity Rate Check Tool to see how much money you can save by switching your provider.
Do you Need Cheaper Electricity?
If you’ve taken the time to understand the information on your bill and discovered you’re paying more than you’d like for your electricity, have you looked around for a cheaper deal? The Energy Professor has a wealth of information on ways to save on your utilities, including details of top deals that could significantly reduce your monthly or quarterly electricity bills.
We hope you found this article helpful! If you are looking for ways to increase energy efficiency and sustainability in your home, be sure to take a look at all of the latest renewable energy options in your area. The Energy Professor helps residential and small business owners find qualified energy suppliers in New York, New Jersey, Pennsylvania, Texas, Ohio, Maryland, Illinois, and Massachusetts.
