15 Reasons Why You Should Not Lease Your Solar Panels


Leasing solar panels offers many advantages, but it also entails several disadvantages that you should be aware of.

Do you wish to go solar but don’t have enough funds? Did someone suggest you lease solar panels? Let us guide you if it’s a suitable choice! Leasing may appear cost-effective initially, considering the hefty upfront costs associated with solar panel installation. However, it comes with its own set of drawbacks and limitations. In this article, we will discuss why you should not lease your solar panels, and provide information regarding contract problems.

Why You Should Not Lease Your Solar Panels?

There are various solar lease problems you might have to face after installation. Below we have mentioned 15 reasons why you should not lease your solar panel.

1. No Ownership

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When you enter into a solar panel contract, you don’t get ownership of the system. According to the solar panel lease agreement, it is owned by the solar provider which means you don’t have any control. This is one of the primary solar panel contract problems.

2. Low Quality of Service

While leased solar panels usually come with free repair and maintenance, the quality of service may not meet expectations. However, you still have to pay the lease every month. Therefore, instead of opting for a solar lease solely for maintenance, consider buying a system and finding a solar provider or installer that offers quality service and maintenance.

3. Does Not Add Value to Your Property

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Leased solar panels don’t add any value to your property as they are owned by your solar provider. This implies you can’t count them as assets and selling your home with a leased solar system won’t give you any extra profit.

Cross-Reference: Solar Leasing: Is the Low Upfront Cost Worth It in the Long Run? 

4. No Solar Renewable Energy Credit (SERC) Benefits

In locations where SREC benefits are available, homeowners can earn one Solar Renewable Energy Credit for every 1000-kilowatt hour of power generated. Every credit has a monetary worth that can be converted into cash. Leasing a solar system excludes you from enjoying this benefit. Instead, the third-party developer benefits from this.

5. No Federal Solar Tax Credit

JAN23 What is the Federal Solar Tax Credit

Getting a Federal Solar Tax Credit enables you to deduct a significant amount of the system cost from your taxes. There is a set of conditions you need to meet to be eligible for the credits. You can find the eligibility criteria in the Office of Energy Efficiency and Renewable Energy. 

But, leasing the solar panel will not allow you to enjoy the credit benefits.

6. Chances of Higher Property Taxes

Buying a solar system usually inflates the value of your property. But when you lease the system, depending on the policies in your region, the authorities might still increase your property tax based on the new revaluation. Even though you don’t own the solar system, you have to face the burden of taxes.

Cross-Reference: Capital Comments: Solar Energy Projects and Property Taxes

7. Stuck into Monthly Repayments for Many Years

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One of the major problems with leasing solar panels is that in this contract, you are contractually liable to pay the providers regularly until the lease ends. These leases are generally 15 to 25-year agreements.

Also Read: Solar Lease Vs Solar Loan: What Should You Opt For?

8. Moving Solar Panel Systems Not Easy

Relocating solar panels from one house to another is not a straightforward task, and in many cases, it might not be feasible at all. If it is possible, you will also need to consider the expenses involved, which could indicate that it is not a financially sustainable choice. Solar systems are tailor-made to suit specific properties, so their design might not be compatible with a different house.  

In addition, it is vital to obtain permission from your local authority, local government commission, utility company, and potentially your homeowners’ association. 

9. Minimum Savings on Energy Production Cost

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Buying a solar panel requires a high initial investment and allows you to enjoy energy almost free of cost. With leased solar panels you can save some extra bucks on energy bills, but you still have to pay a monthly fee for using the solar system owned by a third party, resulting in minimal overall savings.

10. Difficulty in Selling Your Home

Selling a home with leased solar is difficult and unlikely to give you a profitable evaluation of your property. Homes with a solar lease tend to have a lower chance of selling as compared to homes without a solar lease. Therefore, most people do not want to buy a house with leased solar panels due to the extra responsibilities and problems with leasing solar panel contracts.

11. Forced to Reduce Selling Amount to Pay for the Lease 

If the person interested in buying your home refuses to take over the lease, you might need to decrease your selling price to cover their lease obligations. 

If the lease still has a long way to go, the potential price reduction could be significant, which could have a negative impact on your ROI.  

One alternative option could be to keep paying the lease while allowing the new owner to enjoy the advantages of the solar equipment. However, this may not be a desirable option for most people, unless the lease is close to ending. From a financial standpoint, it simply doesn’t make sense. 

Also See: Leasing Solar Panels vs Buying: What is Better?

12. Transfer of Ownership is Often Problematic

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Finally, if you are able to sell your home, transferring the ownership of the lease often gets problematic. It demands the new owner agree with the previous terms and take over the lease. If the new owner refuses to accept the lease, you will still be liable to pay the lease amount even after selling your home.

Also, if the company does not find the new buyer credible enough then they would not allow the transfer of lease ownership to them.

13. Restrictions and Implications on Property

Some leases come with a few restrictions that might not be convenient for you. The company will have access to your roof for maintenance for the period of the lease. Sometimes you won’t be allowed to construct a new structure near the system to prevent shading issues.

Additionally, check out the 4 Leasing Solar Panels Pros and Cons.

14. Site Upgrades Required 

Third-party developers may ask property owners to upgrade their solar PV systems to maintain efficiency. If trees grow and block the sunlight from reaching the solar panels on the roof, it may be necessary to prune or remove them. 

Their main motivation is to ensure the production of maximum energy, thus allowing them to earn more SERCs. But when you comply with their demands it would add to your expenses. 

Although property upgrades can be advantageous, they may not align with your initial plans or priorities. 

15. Low Return on Investment 

ROI concept

Buying a solar system ensures you a return on investment in the long run. However, the chances of obtaining any return on investment in the solar lease are minimal. Even if you successfully save your monthly electricity bill, that will completely go to the lease payment. Moreover, your lease payment will also increase every year.

Also See: Solar Lease Vs Solar Loan: What Should You Opt For?

Is Leasing Solar Panels Worth It?

Well, after learning the reasons why you should not lease your solar panels you might be wondering if the process is worth it. The answer to this question is subject to your financial needs and requirements. Leasing is a financial alternative and is worth it when you are unable to buy a system due to the high upfront cost. So, in that case, you should lease the solar panels to save yourself from high initial investment.

Buying the solar panel is recommended if you can afford to pay the high upfront cost and have plans to stay in the same home for 20 or 30 years. This will allow you to generate higher savings in the long run and will add value to your property for future selling. Being an owner, you will also get to enjoy the SERC and credit benefits.

On the other hand, leasing is not worth it if you are looking for long-term savings. 

If you are tired of these solar panel contract problems, our blog on How to Get Out of a Solar Panel Contract can help.

In conclusion, leasing solar panels deprives you of numerous benefits. It offers no return on investment and does not add value to your home. While it is an option for those lacking funds for a solar system, it is essential to understand its drawbacks for informed decision-making and to avoid unwanted consequences. For more informative solar content, keep exploring our blogs.

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