When it comes to getting a solar panel you have four options. You can buy one outright, take a solar loan to get a solar panel, you can lease a solar panel or you can get a PPA. No matter what option you choose to proceed with, each has its pros and cons. In this article, our focus is on solar leases and so we will be looking at leasing solar panels pros and cons. To figure out if a solar lease is a better financial option than others, we’ll also see how much a solar lease is per month.
4 Leasing Solar Panels Pros and Cons
As mentioned above there are quite a few ways to go about when considering getting a solar panel. However, our focus is on solar leasing here and so we will first focus on understanding what solar leasing is. A solar lease is an agreement where you agree to pay a solar energy company a fixed sum every month in exchange for energy that comes to your property from their solar panel.
Now what you need to know is that solar leasing might be one of the more affordable ways to get a solar panel but that doesn’t mean it is the best way to go about it. A solar lease may have a couple of benefits or so but the cons it has for sure outweigh the former. If you don’t believe us then check out the leasing solar panels pros and cons and see for yourself.
Pros of Leasing Solar Panels
1. Upfront Cost
A solar panel is expensive and while the average cost is close to 7 to 10k dollars the price can go upward of 30k dollars as well. And when you decide to buy a solar panel or even take a solar loan you might be asked to make some or the whole of the payment upfront. Not everyone has that kind of money on them at all times and so a solar lease might ease that burden by taking away upfront costs out of the picture.
2. Different Types of Fees
Maintenance, repair, and other sundry charges associated with solar panels may also put a dent in your pocket some years down the line. However, you are free from any and every such charge when you don’t own a solar panel but rather opt for a solar lease. Since the solar panel isn’t yours the cost associated with it isn’t yours to pay.
3. Can Buy Solar Energy System at the End of the Lease
After your solar lease is up, you’ll have the option of purchasing your solar panels. They will be priced at a fair market value based on their age and current level of productivity. However, if you want the panels removed from your house, the leasing company will arrange it, and that too at no charge.
4. You’ll be Tied to the Grid
Because of weather conditions even solar energy can be intermittent at times and this can cause a supply problem. But leased solar panels are tied to the grid which means you’ll still be able to receive electricity from your utility company as and when you need it.
Also Read: 3 Pros and Cons of Offshore Wind Farms
Cons of Leasing Solar Panels
1. Savings Overtime
You can be happy at the start of a lease that you are saving money from the get-go, however, in the long run, you end up paying more on a lease than you would when buying a solar panel. And to make matters worse you are also not getting ownership of the panel once your lease is over. Also, the savings you made initially will no longer feel like savings when you consider the total cost at the end.
2. Tax Credits and Other Incentives
The government as well as other concerned bodies are offering rebates and tax credits to encourage people to go for solar panels, however, these benefits are only available to those that buy the solar panels and do not lease or sign a PPA. And so the cost of owning a solar panel becomes further cheaper making it the better option yet again.
3. Effect on Home
A home with a leased solar panel repels the buyers. If you want to sell a home with a leased solar panel then your buyer pool becomes smaller as not many people are willing to take up the lease and so you either need to pay it off at once to clear the lease or find a buyer that is willing to get the lease transferred to their name.
4. Appreciation in Value
A solar panel brings with it a high ROI. It doesn’t just add value to your property but also brings an annual return of 10 to 30% on your investment. It makes selling the house easier and is a growing asset and so that is surely a point to keep in mind when deciding to own/loan vs lease or sign a PPA.
So you see how there are more cons than pros as we already stated. Also, the maintenance and repair charges might be covered by warranties, and also a solar panel doesn’t easily go bad which means there are fewer chances of you ever having to pay such extra charges which is why there is more or fewer just one considerable benefit of a solar lease over the solar loan or outright buying. After this, let’s see how much is a solar lease per month.
Also See: 3 Amorphous Solar Panels Advantages and Disadvantages
How Much is a Solar Lease Per Month?
In the natural progression of questions, it is only right that you must now wonder how much you end up paying monthly when you sign up for a solar lease. Now that we know a solar lease does not offer a lot of benefits when compared to loaning a solar panel or outright buying one, charging less money in the short run might be the only reason that might make people consider this option.
To revise the basics a solar panel obtained via loan becomes your property while a leased solar panel is owned by a third party. Leasing does not invite upfront costs while solar loans do. In either case, you will be paying money monthly for years and will be paying more money than you would have paid if you purchased the system outright. Lastly, both options help you save money immediately.
Having said all of this and considering the arguments made in the leasing solar panels pros and cons section it is still pretty expensive to sign a lease as you might end up paying anywhere between 50 to 250 dollars a month. Only if your monthly electricity bill is more than this amount will you benefit from the lease otherwise you will end up making a loss on the lease if your bill amount is less than the monthly lease installment.
The amount payable on a lease is determined by combining various factors such as the company you sign up with, the energy you consume, your location, etc. So as long as you are doing your research and comparing the options thoroughly before signing up for either option you will be well protected from making a disastrous decision.
Also Read: Leasing Solar Panels vs Buying: What is Better?
What is a Solar Panel Lease Calculator?
Most ground-breaking technology stuff caters to rich people initially and if there is potential to break into the regular population then the prices come down and a wider user base is targeted. Solar panels too started as a device for the rich but soon became more affordable for the general public as newer financing options came to the forefront. With loans, leases, PPAs, etc. it is tough to look past solar panels and so using a solar panel lease calculator we will tell you how you can work out the numbers before you end up signing a lease.
A solar lease sees your monthly payment go up by 3% each year. Now let’s take the average of 120 dollars as the electricity cost of a household. A 4 kW solar system is enough to power up a house of people and costs you 80 dollars a month. This system will produce 1,000 kWh or so of electricity each month. The average charge per unit of electricity in the US is 11 cents.
Now you use the formula of,
Total energy savings – total solar lease = total savings
Which in this case comes to (1,000 × 0.11) – 80.
This leaves you with 30 dollars in savings each month.
Also See: What is Meant by Solar Loan Calculator?
Is Leasing Solar Panels Worth It?
We have seen leasing solar panels’ pros and cons and have also done a rough calculation of how much money you will be saving on a solar lease every month. It is safe to say that in the short run, you will be saving money by signing up for a lease but once the lease period comes to an end you will realize that you have spent more money paying for the system while also not becoming the owner of the system.
That isn’t the only con of signing up for a solar lease there are more downsides to it and so it wouldn’t be worth it to opt for a solar lease. However, if you wish to go off the grid but can’t afford to buy a solar panel or can’t qualify for loans, or face any such problems then it is okay to go for a solar lease since it might be better than not getting a solar panel at all.
Also Read: Should I Buy A House With Leased Solar Panels?
What Happens at the End of a Solar Panel Lease?
A solar lease is a long-term commitment and it might go on for 20 to 25 years. However, the question here is what happens at the end of a solar panel lease. You might sell a house before the lease is over and we have mentioned what you can do then but what happens if you don’t sell your house and let the lease end?
It turns out there are a couple of outcomes that are possible once the lease ends. You have the option of,
- Getting the solar panel removed after the lease is over
- You can renew the lease if you want to continue using the solar panel
Alternatively, before the lease ends you have the option of buying out a solar lease or terminating the contract midway.
Also Read: What Happens When You Pay Off Your Solar Panels?
What are the Pros and Cons of Leasing Land for Solar Panels?
While you can lease a solar panel you can also lease land for solar panels or more appropriately, solar farms. Here you can give away land for or take up land and set up lots of solar panels. These solar panels produce electricity as they do and this electricity is then sold back to the grid. So you make money from it, however, it is not all good news as there are some downsides to it as well and so we will now look at what are the pros and cons of leasing land for solar panels.
Pros
1. Making money: The first benefit is obvious. By giving away land on the lease you make extra money that can act as a second or passive income. If the land is anyways sitting idle and can be used for a great purpose as this then why not.
2. Sustainable farming: Such a move promotes sustainable farming practices. The farmer knows the impact of extreme weather conditions and climate change and so by supporting solar projects they know they can contribute to reducing emissions and making things better for future generations.
3. Multiple complementary uses: A solar farm does not mess with the regular part of the farm and so the same land can be used for multiple purposes. Certain combinations can even benefit each other like the solar panel providing shade to certain crops or sheep nicely keeping the ground mowed.
4. Money savings: Lastly, you also end up saving money on your electricity bill and may even find yourself paying nothing in utility charges at certain times of the year.
Also Read: What Are the Benefits of Solar Canopy?
Cons
1. Long-term commitment: Any kind of solar contract is a long-term commitment. Once signed you are stuck with it for a decade or two and so you might feel helpless down the line if things don’t work out as you wanted them to.
2. Tax implications: Agricultural tax exemption and property tax bills might be affected by entering such a contract. Also, there are a lot of government programs that you need to check with to make sure you aren’t violating any arrangements.
3. Impact on farmland: Your land might be impacted as solar panels need to be fitted on the farm which might affect your drainage, soil, or other aspects. Though there isn’t much damage done, some are for sure.
4. Aesthetic: The look of the farm might be affected by all those solar panels on the farm and not everyone is a fan of the same.
5. Impact on property: Just like a leased solar panel makes it difficult to sell a home, the same applies to a solar farm. The transition of property from one generation to the other may be impacted because of land being leased for solar panels.
So with that, we have now covered leasing solar panels pros and cons. We have learned by now that personal preferences and requirements determine if leasing solar panels is worth it or not. However, on the macro level, it is safe to say that buying the solar panel remains the best option while taking a solar loan is the second best option leaving solar lease and PPA to contend for the third spot.
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