Solar Energy: To Lease or To Own?

March 6, 2015 in Industry News

Solar is becoming more and more popular as PV prices decrease and electricity bills increase. But when it comes to installing a solar array on a home, should you lease or buy? Many US homeowners, about 2/3, are opting for the solar lease option due to the low or zero up front costs and so they don’t have to worry about the maintenance of their array. However, it might be more economical to consider taking out a solar-specific loan to purchase and own the solar PV system. A recent report form the Energy Department’s National Renewable Energy Laboratory (NREL) found that solar financing can be 30 percent cheaper than solar leases. With the desire for solar increasing, so is the need for solar financing options. Between October 2013 and October 24, at least nine new solar-specific loan programs were announced The NREL team looked at the growing options for solar financing and found “that solar loans with 5, 10 and 20 year maturities had a lower levelized cost of energy (LCOE) than a 20-year PPA lease”.In additional to being a more cost-effective approach to financing a solar system, owning a solar system through a loan program adds value to your home and increases its resale value. Systems financed through a lease may be viewed as a deduction against home value by some appraisers and could complicate the sales processes. Several variables can affect the type of financing that a potential solar homeowner will have access to which can affect that economics of solar loans over solar leases, so this isn’t a one-size-fits-all solution.

For more information: Banking on Solar: An Analysis of Banking Opportunities in the U.S. Distributed Photovoltaic Market, National Renewable Energy Laboratory

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