Leasing solar panels — commonly known as “third-party owned” solar panels — has earned attention as an alternative to purchasing solar panels. Despite historically low solar panel costs, the cost of installing a PV system leads some homeowners to consider leasing solar panels instead of owning them. But leasing solar panels isn’t always a smart option.
What is Third-Party Owned Solar Power?
TPO involves solar companies financing the installation and maintenance of residential PV systems. Homeowners get lower electricity bills and no upfront capital costs when leasing solar panels. In return, they pay a monthly leasing fee to the provider. Financing can be provided by a solar installer, a manufacturer, the utility company or another source.
Currently, 14 states have embraced third-party ownership of solar power. In California, for example, TPO accounts for 74% of residential solar installations statewide. Some reports project third-party ownership of solar installations could make up 83% of solar capacity in the United States by 2016.
There are drawbacks, however. One of the primary advantages of solar power is independence from the utility company. By installing rooftop or ground-mounted PV arrays, homeowners are able to generate their own electricity — even selling electricity back to the utility company, in some cases. Leasing solar panels creates another binding monthly payment for homeowners.
Leasing Solar Panels Creates Debt
When you purchase a solar system, you’re adding value to your home. A leased solar panel system, on the other hand, creates a debt liability that may need to be passed on to a homebuyer. In a real estate market that is already weak for home sellers, leasing solar panels creaties another obstacle to a home sale. And in some cases, the new homeowner may have to pay a hefty fine to break the lease agreement you entered into with your solar provider.
When you lease solar panels, you surrender many of the advantages that come with buying solar panels. Instead of enjoying solar tax credits and rebates, those benefits will go to the owner of the solar installation. So will the rights to earn and sell renewable energy credits.
Why Lease Solar Panels When You Can Own?
A typical 5kw system begins paying for itself immediately. In Maryland and Virginia, a 5kw solar installation can pay for itself in as little as 5 years through lower electricity bills, SREC sales and other cost recovery methods.
For homeowners who can make the financial investment up front, the ROI of installing solar panels is pretty clear.
If leasing solar panels is the best option for you, Renewable Energy Corporation can assist you with financing. Contact our estimators for a FREE solar estimate and to discuss financing options.