Is It Better to Buy or Lease Solar Panels? What the Pros and Cons Reveal About Two Paths to Harnessing the Sun

There are more ways than ever to pay for your own switch to clean, infinite solar energy. Is it better to buy or lease solar panels in 2022? The answer depends on your financial situation, energy needs and ownership goals. Whether you’re looking to own your solar system outright or pursue the lowest monthly payment possible, today’s options guarantee there’s a way to make it happen at a price point that works for you.

The Takeaway

• Buying solar panels outright or with a solar loan makes the most financial sense for most households

• Federal and local incentives typically only apply to purchased systems, excluding solar leases

• Leasing solar remains a solid option for those looking to lower monthly electric bills with as little money down as possible

• Property values increase when purchasing solar panels, but leasing complicates selling

Buying a Residential Solar System: Cash Purchase or Solar Loan

For most homeowners, the greatest benefits of going solar are realized by owning the solar panel system through either a cash purchase or solar loan. When you buy your solar system, you’ll see an immediate increase in your home’s property value. Generous financial incentives are available to those who buy their solar panels, even if it’s with a loan.

Pros of owning your rooftop solar panels

Invest in a future full of savings and value - Ownership translates to immediate value for your property and straightforward utility savings. The most immediate benefits occur when you purchase the solar system outright without a loan. Avoiding the interest that comes with a 10 to 20 year loan cuts the payback time down significantly. A cash purchase combined with the power of incentives means that your system pays for itself in as little as 5-7 years. With today’s reliable solar panel technology lasting 25 to 30 years, that could be over 20 years of saving well over $100 each month!

Qualify for incentives - The federal solar investment tax credit (ITC) remains at the full 26% through 2022 before stepping down to 22% in 2023 and disappearing altogether the following year. But this generous incentive only applies to solar installations that are purchased with cash or a solar loan. For the average-sized residential installation, the tax credit is worth $6,000 to $8,000! If you typically don’t owe that much when you file taxes, no worries. The solar ITC can be carried forward for up to 20 years. Several states and localities offer additional incentives that bring costs down even further.

Increase your property value - Property values are shown to increase with the addition of solar panels to a home. Data from Zillow reveals that homes with solar sell for 4.1% more on average. If you’re concerned about how that impacts your property tax liability, policy makers have already addressed those concerns in 25 states by implementing exemptions that guarantee no additional property tax burden as a result of going solar.

Own your commitment to a cleaner future - Solar is the ultimate zero-carbon energy source, and by owning your solar panels you’ll be at the heart of the movement to clean up the world for a better future.

Cons of owning your rooftop solar panels

Higher upfront cost (if paying cash) - The only downside of purchasing solar panels outright is cost due at installation. The average cost for a residential home installation is roughly $3.00 per Watt, which translates to $24,000 for an 8 kilowatt system. That may sound like quite the expense, but considering that monthly utility bills are often north of $200, it’s easy to see how the savings catch up quickly over the 30 to 40 year lifespan of today’s hardware.

Loans extend payback time - Rates are very competitive, but borrowing money comes at a cost. Solar loans typically come with interest rates from .99% to 8% APR range, depending on credit. Although even the lowest interest rates eat into payback time, you’ll still see thousands in energy savings over the life of the loan.

Leasing a Residential Solar System: What You Need to Know

The main difference between buying and leasing solar is who owns the hardware on your roof. When you go with a lease, the installer owns the solar panels and you reap the benefits of clean energy and fixed electricity costs without maintenance obligations.

Pros of leasing solar panels

No money down - Competitive solar leasing options make it possible to go solar for little to no money down. This makes solar accessible to just about everyone.

Fixed energy costs and immediate energy savings - With a solar lease, you benefit from the affordability of infinite solar energy for the life of the system. Your utility would never let you lock in a fixed rate for 25 years, but you can do just that with a Caliber Solar lease.

Maintenance-free - Since the hardware isn’t yours, you’re not on the hook for any maintenance. No matter the situation, solar panels are largely maintenance-free and rarely need upkeep over their 25-30 year life span, but leasing means that you’ll never be responsible for repairs should the need arise.

Cons of leasing solar panels

You never own the panels - With a lease, the installer remains the owner of the hardware. If you decide you really want to own the system down the road, most lease contracts include a buyout option after about year six or seven of the lease.

Missing out on incentives - Cash purchases and solar loans qualify for the solar Investment Tax Credit, but leases do not. If you’re hoping to lessen your tax burden by going solar, leasing is not the path to pursue. On the bright side, the cost savings of incentives are built into your lease’s competitive fixed rate with Caliber Solar.

Escalator clauses - Many lease contracts include an escalator clause that increases your monthly payment by a fixed amount at predetermined intervals. These rate increases are almost always still far less than utility rate increases, which have approached 18% in some states.

A real estate obstacle - Not many prospective homebuyers are interested in taking on a multi-year lease. Before selling your home, look into a buyout of your lease contract to take full ownership and turn the system into added value.

Everyone’s Situation and Goals Are Unique - And Caliber Solar Is Here to Help

What brings you to solar? Your unique situation will determine the best options for going solar, and we’re here to help you move forward. Our residential solar experts would love to chat to find out how the team at Caliber Solar can serve you, whatever your home and financial situation may be. Book a 10 minute discovery call today! We'd love to be your partner in your journey towards a clean energy future.