Thinking about making the switch to clean energy, but can’t decide whether to buy or lease solar panels? You’re not alone in this common dilemma for homeowners considering residential solar. This article will break down the main pros and cons of each financing option to help you make the best decision for your home and wallet.
When you buy solar panels, you own the system outright. This means you’re responsible for any maintenance, but you also receive all the financial benefits, including tax credits. The up-front cost for buying solar can seem high, often ranging from $15,000–$25,000 for a typical home system after a solar company installs it.
However, various solar financing options can make this up-front investment more manageable. Many homeowners opt for a solar loan, which is a popular financing option that allows you to pay for your system over time with monthly payments. You can also take advantage of the federal solar tax credit and other local solar incentives to significantly reduce the net up-front costs.
Understanding your solar payback period is also important when buying solar panels. This is the time it takes for the money saved on your electric bills to equal the system’s total cost. After the solar payback period, the solar power you generate electricity with is essentially free.
Leasing solar panels means you don’t own the system on your roof. Instead, a solar energy contractor installs the equipment, and you sign a lease agreement to pay a monthly fee for the solar energy it produces. This solar leasing option often has a very low or even zero up-front cost, making it attractive for those who want to save money without a large up-front investment.
There are two common types of agreements: a solar lease and a power purchase agreement (PPA). With a solar lease, you make a fixed monthly payment to the leasing company. With a PPA, you don’t pay a fixed fee but instead purchase the solar power generated by the system at a set price per kilowatt-hour, so your lease payments may vary each month.
With both solar leases and PPAs, the leasing company owns the equipment and handles all maintenance and repairs. However, you won’t be eligible for the federal solar tax credit or other incentives. Those financial benefits go directly to the lease company that owns the system.
When it comes to long-term savings, buying solar panels almost always comes out on top. Over the 25+ lifespan of a solar installation, ownership delivers more value. Once the system is paid off, you generate electricity for free, leading to significant additional savings.
A solar lease provides more immediate but smaller savings, as you will always have a monthly payment. Your money saved each month is the difference between your lease payment and what your utility bill would have been. Every solar review you read will highlight this key financial difference.
Here’s a quick comparison of potential savings over 20 years. Your actual results will depend on factors like your location, energy usage, and local electricity rates.
| Option | Estimated 20-Year Savings |
|---|---|
| Buying (with cash) | $20,000–$30,000 |
| Buying (with solar loan) | $15,000–$25,000 |
| Leasing (Solar Lease or PPA) | $10,000–$20,000 |
Owning your solar panel system can directly increase your home’s value. Studies from Zillow have shown that homes with owned solar panels sell for a premium. Potential buyers see an owned system as a valuable upgrade that lowers their future monthly electric costs.
Leased systems, however, can sometimes complicate a home sale. A potential buyer might be hesitant to take over a multi-year solar lease. To complete the sale, you may need to buy out the remainder of the purchase agreement, which could reduce your profits.
Solar panels are durable and generally low-maintenance, but issues can still happen. With a leased system, the leasing company or solar installer handles all repairs, offering peace of mind. Any reputable solar company installation comes with strong manufacturer warranties that often cover major components for 20–25 years.
If you own your system, you’re responsible for any maintenance after those warranties expire. However, most solar installations require little more than occasional cleaning. When you need a professional for your solar maintenance, finding qualified technicians is straightforward.
Buying your residential solar system gives you complete control. You work with your solar installer to choose the equipment, decide on the system size, and make modifications later, like adding a battery. With a solar lease, you’re limited to the options and terms offered by the leasing company.
Solar technology is constantly improving. If you buy your system, you are committed to those panels for their entire lifespan of 20–30 years. Leasing might offer an option to upgrade to newer technology at the end of the contract, but this varies between solar companies and is not always guaranteed.
Deciding whether to buy or lease solar panels depends on your financial situation and long-term goals. Buying solar offers greater savings and control but requires a larger up-front investment, though a solar loan can help. Leasing provides an easier path to installing solar with less responsibility but offers lower long-term financial benefits.
Consider your budget, how long you plan to stay in your home, and how much control you want over your energy system. It’s best to get quotes for both options from multiple solar installers. Ultimately, the right choice is the one that best aligns with your circumstances and helps you achieve your energy goals.
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