Why Solar Leases Are Bad

Solar leases are a popular way to get solar without having to pay for the panels upfront. They work similarly to renting a car, except you pay for the electricity the system produces and don’t own the equipment. A reputable solar installation professional will handle all the details for you.

If you want to save money on your utility bill, installing a solar panel system is the best option for your home. However, there are many reasons to avoid a solar lease and instead opt for a cash purchase or solar loan.

Why Solar Leases Are Bad

The biggest reason to avoid a solar lease is that they aren’t always the best financial decision. There are a lot of things that go into the cost of solar and how much you save over the lifetime of your system, so it’s important to understand each option before making a decision.

A solar lease will typically have lower monthly payments than a cash purchase, but those savings may not last as long because you’ll be paying the leasing company for the life of your system. In addition, you’ll have to deal with annual payment escalators, which are designed to adjust your monthly payments to account for inflation and expected annual electric rate increases.

Another factor that makes a solar lease not the best financial decision is that you can’t take advantage of federal tax credits and other incentives to boost your savings. This is because the solar installer owns the panels and you don’t. In some cases, you may be able to buy out the lease and the panels from the company at the end of your lease term, but this option isn’t available for all companies.

If you do want to take advantage of the 30% federal tax credit, a cash purchase or solar loan is the best option for your situation. In addition to the Federal tax credit, you also have to take into consideration local incentives that may be available in your area to help you pay for your solar installation.

It can be a big expense to take the time to go through all of these details. This is why it’s so important to work with a reputable solar installation professional that will take the time to explain your options and help you make the best decision for your property.

A good solar installation professional will be able to help you figure out whether a cash purchase or a solar loan would be the best choice for your needs. Then they’ll provide a customized solar proposal to make sure you’re getting the most value for your money.

You should also consider a zero escalator option, which costs you more up front but will save you more over the lifetime of your system. This is particularly important if you’re looking to maximize your lifetime energy savings and are considering solar as a long-term investment.

It’s also worth noting that a solar lease is often accompanied by a lengthy contract that can be a hassle to work through and can affect your ability to sell your home. In fact, you should never sign a solar lease if you intend to sell your house within five years or less.