Should I Buy or Lease My Solar Panels or System?

Should I Buy or Lease My Solar Panels or System?

Thinking About Going Solar?

The average price for a solar system on Long Island is about $30,000 in total. However, this figure is subject to a reduction of 25% right off the bat with the available New York State Tax Credit. Now factor in the 30% Federal Tax Credit which is available to everyone switching to solar in the United States and the number drops even more. Finally, there’s the $.20 per Watt rebate offered through New York State Energy Research and Development Authority (NYSERDA).

The Impact of Leasing or Buying Solar When Selling Your Home

In addition to the flat-out benefits that buying has over leasing, there is one condition that homeowners often overlook: the impact that leasing or owning solar panels has on selling their home. Even if you aren’t remotely interested in selling your home anytime soon, it still is a consideration to make for ten or even twenty years down the road. Contrary to popular belief, there is a difference in the obstacles you’ll face depending on whether you lease or own and as you could have probably guessed owning is far better.

One piece of advice you may hear is that solar panels will make your home more appealing on the market. This is actually quite true if you own your solar panels. According to the U.S. Department of Energy’s Office of Energy Efficiency & Renewable Energy, a house with owned solar panels will sell twice as fast as a house without solar panels.

That being said it actually gets harder to find potential buyers if you are leasing your solar panels. The new buyer’s credit must qualify to take over the lease of the panels and will be required to take on any future payments that still need to be made. On top of the new mortgage for the house, moving costs and other renovations homebuyers are not usually thrilled about taking on another monthly expense, therefore this quality often makes a house harder to sell.

Did you know that the status of ownership of your solar power system can also affect the price that you receive for your house? Owning a solar system that has no further monthly payments can be a huge draw to potential buyers and ultimately lead to increased home value. In fact, an independent firm, ICF Consulting, has deduced that reducing electric bills by $1 a year can add about $20 to your home sale value. Therefore, if you are able to cut electric costs by $1,000 each year, you can expect to see a home value increase of $20,000!

However, just as an owned system can benefit you financially when selling your house, having a leased solar system on your home can detriment you. If you are selling your home with leased panels your buyer might not want to pay each month for the leased system. In this case, you’ll have two options: the first is to pay the remaining payments for the lease in full in order to sell your house. This lump sum could end up being a large sum of money depending on how much time left on the lease there is. The second option, if you are even able to pull it off, is to get out of the lease and have the panels removed from the house. This work can also end up costing a decent sum of money as well, so in either case, you’ll be left with less than you anticipated for the sale of your house.

Why Buying Your Solar System is The Smart Choice

Buying your solar system is the educated choice for long-term energy savings. First and foremost, when you own the solar panels and system you are the one that receives the federal and state tax credit as well as the utility rebate. When you own your solar system you can completely eliminate your electric bill, increase the equity of your home and have a complete return on investment in as little as 6-7 years. After that, you’ll own your system and can reap all the benefits solar energy can provide your home or business.

When you weigh the pros and cons of each option it becomes clear that buying and owning your solar system provides much more value and more benefits overall. Let’s review it one last time:

  1. Monthly payments toward a lease are always MORE than a monthly payment towards your loan would be.
  2. You give away the ownership of your roof and solar system when leasing. Therefore, you CANNOT claim it on your tax refund.

  1. You will lose equity and have a harder time selling your home if you are leasing your solar panels. The exact opposite is true when you own your solar system.

Your Potential Incentives

There is currently a federal incentive of 30% of the total cost of the system for those who decide to switch over to solar. Also particularly on Long Island, New York offers a state incentive for solar of 25% of the cost (up to $5,000) as well as a PSE&G rebate of 4-5% of the cost. When you lease your solar system, you get NONE OF THESE. The incentives go to whoever owns the solar panels and system, not you. This brings us to our final difference which is the total lifetime savings of having your system on your house. Solar leasing companies will boast about 10-30% savings on your utility bill, which if you are used to paying full price for electricity seems great. That is until you factor in that buying and owning your own solar system can yield savings of 40-70% off your electricity costs for the lifetime of your system. On the one hand, leasing seems to be a pretty good deal; you get a “free” solar system installed on your home or office. But how can you lease something that is free? Let’s Break Leasing Down: First, you forfeit your rebates. Then, at the end of the first month on your lease, you’ll get a bill. For the next 20 years, you’ll continue to get that bill each month with an additional annual increase. At the end of it, after 240 payments… you still won’t own your solar panels! Free? We don’t think so.

Leasing or PPA?

Many companies around Long Island will boast about their solar leasing deals like they were the greatest thing since electricity was discovered. You’ve probably seen or heard advertisements offering to install a free solar system if you lease with that particular company. But ask yourself: “how can I lease something that is free?” Save Money Buy Solar The real draw to solar leasing is that you don’t pay any upfront costs to have your house equipped with solar panels and a solar system. What some don’t realize is that these exact benefits can come from a financing plan with a loan that’s super easy to qualify for. By showing the lender that the loan payments will come from offset energy bill fees, you still pay no money out of pocket, are able to pay the balance over time and as a benefit, you’ll get to own your system at the end of the term. So with the similar terms on each option, what’s different between the two? A huge difference between leasing and buying is the flexibility of the two options. A solar lease is a binding agreement between you and the leasing company that you cannot get out of easily. Most leasing terms are 20 years, so even if you do not want to continue with the deal earlier than the term, you’re already committed and locked in. When buying your solar power system, you will have a guaranteed lower monthly payment and have a guaranteed 5 years shorter

Amazing Financing Options

The figure above, while significantly reduced might still seem like a bit much of an investment. However, what if we told you there is a way to still get these savings and pay no money out of pocket? This is an absolute possibility with the New York State-Sponsored loan through EFS. With an interest rate of just 3.49% with no prepayment penalty and no risk of a lien being put on your home, many homeowners have taken advantage of this spectacular loan. The payment of this loan when factoring the same example from above comes out to only $99/month, a huge difference from a typical $200/month electricity bill from PSE&G that most Long Islanders are used to paying. There are no monthly increases and once you pay off the loan you are left with NO monthly payments for your electricity. And best of all, as we’ve already mentioned:

Buy Your Solar System Now!

In fact, solar system prices are the lowest they’ve been in history right now. How much have they dropped? In 1998, the median cost of a solar PV (photovoltaic) system was about $12/watt produced before any incentives.  By the third quarter of 2014 the price had dropped to an average of $3.97/watt produced; a decrease in the price of over 67%. Moving forward through 2016, the efficiency of solar panels has never been higher either. In 1977, the Solar Energy Research Institute was founded to study the progression of the then budding technology of solar power. Since its founding, the Institute has been renamed as National Renewable Energy Laboratory, but in that time the efficiency of solar panels has been improved by at least 50%.

Thinking About Going Solar?

When making the decision to switch over to solar energy many home and business owners are left with one big question: “Should I buy or lease my solar panels?” We know that it’s not a decision made lightly, so we wanted to walk through both options. While each option has different cases where each would be beneficial, if you dig into the facts and figures behind each option the answer becomes clear Buying a solar system is more flexible, costs less in the long-term and provides more value to homeowners than leasing. And we’ll break down exactly how you can benefit from owning the solar system for your Long Island home or business.
Buying your solar panel system is the most economical choice for home and business owners looking to join the solar movement that’s swept the nation. While the figures of buying your system may look intimidating at first when factoring in all the assistance and options available it becomes evident that buying is the best option for those looking to save the most money.