© Provided by CNET . _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ___Buying a solar panel is expensive and out of reach for many. But there is another option: renting or leasing solar modules.
There are many reasons to invest in solar panels these days. The climate crisis is more pressing than ever, the cost of solar energy is at an all-time low, and the financial incentives to install solar panels continue to grow.
If you want to get the most financial benefit from a solar system, experts recommend buying one.
Buying creates ownership, not renting. "It's kind of like buying or leasing a car," said Gilbert Michaud, an associate professor at Loyola University Chicago's School of Environmental Sustainability.
Leasing or renting is also a viable option because it lowers the barrier to entry, says Michaud. Renting can be tricky when planning a move.
So which is the best? Buying a solar system or renting it from a solar company?
The answer largely depends on your personal situation. Each option has its pros and cons and serves different purposes. But if you know what you're getting into, buying and leasing can be a good solution, experts say.
Here's everything you need to know to decide whether to buy or rent solar panels.
What is the difference between renting and buying solar panels?
When you buy solar for your home, you pay (or finance) all installation costs and the panels and equipment are yours.
"If you're buying panels, you own the system and you'll have to pay high upfront costs, but there are a lot of benefits," Michaud said.
Here are the pros and cons of buying solar panels:
Get the solar system
You can claim federal and state tax credits to offset the costs. | Installing a solar system requires a higher initial cost |
Signs add value to your property when you sell your home | You are responsible for the maintenance of the solar panels |
The modules have the potential to further reduce costs over their lifetime. |
On the other hand, renting solar panels is a completely different scenario. Instead of buying and owning a system, you have a third-party company install the panels on your roof at little or no cost and then pay a monthly rental fee for the panels.
You will continue to produce clean energy and potentially reduce your utility bills. But there are a few other things to consider when renting solar panels:
rental or leasing of solar panels
Little to no upfront cost | There is no increase in real estate prices |
The solar company is engaged in maintenance | Less savings on energy bills over the life of the system compared to buying |
Reduce your monthly electricity bills | Selling a home can be a logistical challenge |
Is it better to buy or rent solar panels?
There is no universal recommendation for buying or renting solar panels.
"It depends on your disposable income and your goals," Michaud said.
If you've saved some money and plan to be in your home for 20 or 30 years, it's probably best to buy panels, Michaud said. Buying solar energy gives you a better payback period and increases the value of your home when you sell it.
But maybe you don't have much money for the initial costs and want to start solar power generation as soon as possible for environmental reasons. If so, leasing could be the best and fastest route to solar power, Michaud said.
"Not everyone has a big house and can't spend $20,000," Michaud said.
How much does it cost to rent or lease solar panels?
Solar panel rentals vary greatly depending on the size of the solar array and your installer. (Think of the car rental analogy.)
Solar panels typically cost between $100 and $200 per month to rent, Michaud says. But the best way to be sure is to get a quote from a solar company.
How to Rent or Lease Solar Panels
The process of renting solar panels is very similar to working with any other contractor. Here are the steps you need:
Contact an installer (or two)
Contacting a solar panel installer is the first step. The company will probably want to come to your home, assess your property and advise you on the options.
Michaud recommends getting multiple quotes and working with reputable solar companies. If you're not sure who to call, talk to your friends and neighbors and find out who they recommend.
You can also check out CNET's list of the best solar companies of 2023. CNET has done all the hard work for you by evaluating and ranking solar companies based on these three criteria: equipment, warranty and service, and whether the company offers a rental or rental option.
Choice between a rental agreement or a power purchase agreement
Solar installers will give you estimates after doing their homework. Depending on the installer, you may have to choose between a traditional rental agreement and a so-called power purchase agreement.
In a PPA, the solar company installs, owns and operates the solar panels, much like a leasing company. According to Michaud, instead of paying the company to rent the panels, you pay the company a flat rate for the electricity you use (some of which, of course, comes from your solar panels).
"Again, the benefit is that you don't have to pay those upfront costs," Michaud said. And setting a fixed price for electricity can protect a traditional utility against future rising energy costs.
Read and sign the agreement
After choosing between leasing or a PPA, you should take the time to review your solar contract. According to Michaud, if you're unsure about something, it's a good idea to contact an attorney.
Once the contract is signed, the solar company will start installing the panels and you will immediately generate clean electricity.
How much does it cost to buy solar panels?
As with rentals, the cost of purchasing solar panels depends on your home, the number of panels you purchase, and the name of your installer.
Michaud said he expects most private clients to spend between $15,000 and $20,000, including labor costs. This is the total cost before any discounts or promotions are taken into account; For example, taking advantage of the federal solar tax credit can reduce these costs by 30%.
Another way to think about the cost of solar panels is the average cost per watt. According to 2022 data from research firm Wood Mackenzie, the average 8-kilowatt residential solar panel costs about $3 per watt. At this price per watt, a 6 kilowatt solar panel would cost around $18,000 without subsidies or rebates.
How to pay for solar panels
There are many ways to pay for solar panels (just like any other home improvement project). Here are some options you might want to consider:
Species
If you have enough money to pay for a complete solar system, this is a great option. You pay no interest on the loan, allowing you to quickly repay your investment.
If you don't have $20,000 right now, you can save with a High Yield Savings Account.
solar loan
Many banks and solar installers offer loan products specifically for solar panels. Some states even offer interest-free or subsidized loans to encourage solar installations.
Check with your local bank or utility company to see what is available in your area. With a solar loan, you can install solar panels faster, but the downside is that you have to pay more interest, which increases the payback period for your panels.
Other types of loans
Finally, most financial products can be used to pay for solar panels.
- A personal loan is a quick and relatively easy way to get cash, but it comes with a high interest rate and usually unfavorable terms.
- A home equity loan allows you to increase the value of your home and take out a lump sum. This type of product has a lower interest rate, but using your home as collateral for a loan can be risky.
- A home equity line of credit is another way to capitalize on the equity in your home, but it's more like a credit card than a one-time payment. Keep in mind that these loans have different interest rates, which may cause your payment to increase over time.
Buy or rent energy
By concluding an energy lease or a purchase agreement, you can buy solar panels with virtually no down payment. Instead, you have to pay monthly.
Since you do not own the signs, you must transfer the rent to the new owner or remove the signs. "There are a lot of logistical challenges," Michaud said.
Credit card
Some credit cards have limits high enough to cover a $15,000 solar panel. But that doesn't mean you have to take advantage of it.
Generally, credit cards are not designed to finance major home repairs. If you can't pay off your entire balance when your statement is due in a month or more, having a large balance can quickly lead to high interest rates and send you into a cycle of debt.
