Whether leasing or buying solar panels is better depends on your financial situation and your goals. Buying will save you the most money. But leasing can be an easy way to get started with solar. Call EcoMen Solar at 732-SOLAR-NJ.
Almost nobody in New Jersey these days pays for solar panels all at once with a big chunk of cash. It’s just like getting a new car. Either you pay a cash price and finance it with a low-interest loan or you lease the car and pay monthly lease payments until the term of the lease is up.
For solar panels, most homeowners take advantage of one of the financing options that New Jersey allows, some of which aren’t available in other states. And, just as with a car, the two most popular ways to finance solar panels are to either buy them outright, usually with a loan, or to lease the panels.
People argue endlessly which option is better for the average homeowner in New Jersey. But in my experience, that’s not the point — both buying and leasing are good options, depending on your situation.
So, to help you understand the pros and cons of each approach, I’ll go over the main points below.
Buying Solar Panels
Cash solutions yield the greatest long-term financial rewards, and typically pay back in 4-6 years.
To sum it up, it’s better to buy solar panels rather than lease them if you want to get the maximum financial benefit and if you are willing to get a bit more involved in the process.
First, by owning panels you’ll qualify for the government incentives available now, especially the federal tax credit, which allows you to subtract 30% of the cost of your solar system from your taxes. If you own panels, you’ll also earn solar renewable energy credits (SRECs), which currently trade in New Jersey for about $235 each.
Owning solar panels will cut your electric bill, on average, 70% or more, or even eliminate your bill entirely (except for a small customer service charge), if your system is large enough. The payback time for buying solar panels with cash is generally 4-6 years in New Jersey, depending on the rate your utility charges for electric power and the productivity of your solar energy system, measured by its total solar resource factor (TSRF).
And when you own the solar panels, you’ll get free electricity for the life of the system, which can be 30 years or more.
If you buy your solar energy system, just the savings on your electric bill, proceeds from selling SRECs, and tax benefits can offer a return comparable to or better than what you’d get in the stock market, according to a study by the North Carolina Clean Energy Technology Center.
On top of that, solar panels can increase the value of your home when it comes time to sell. Home values can increase $20 for every $1 of energy you save every year with solar, according to the National Renewable Energy Laboratory. Using these numbers, a solar system that saves you $400 per year could add $8,000 to the value of your home. And you could do even better than that. A 2015 study from Berkeley Lab shows that homeowners across the country have been willing to pay a premium of about $15,000 for a home with an average-sized hosted solar array.
Finally, if you buy solar panels you get more control over the process — and the result. You can decide on the equipment, the placement on your roof or in your yard and even how many solar panels you get.
Of course, with that control comes responsibility. If any issues arise with your solar panels, you’ll have to contact your solar installer to diagnose and fix any problems. But the good news is that most solar panels carry a performance warranty of 25 years. Since the typical home solar system has no moving parts, there’s not much that can go wrong, as long as everything was installed correctly to begin with.
Just make sure you understand enough about your options to select reliable equipment from a reputable solar installer who’s committed to high quality work.
And even if you buy panels outright, these days you don’t have to put down much or anything upfront. Most solar installers offer loans at a good rate to cover much or all of the cost of a home solar system.
Leasing Solar Panels
Enjoy worry-free operation.
If your credit rating is not as strong as you’d like or if you don’t pay enough taxes to benefit from the federal tax credit, then leasing may be a better option for you.
With a lease, a solar financing company owns the solar panels. They take advantage of the federal tax credit and other government incentives. Plus, they get the SRECs, which they can sell.
But the big advantage of letting somebody else own the solar panels is that you can get solar at home right away without having to put any money down or go through the effort of getting a loan. You can start saving 20% or more off your electric bill immediately with a solar lease.
And if anything goes wrong with your solar installation, if you lease solar panels, then it’s the responsibility of the solar company to fix them. Most leases also include a monitoring app that allows you to track the energy produced by your solar panels on your phone or computer.
The downside is that if you lease solar panels, you may not have as much choice of equipment. That shouldn’t be a problem if you go with an installer that offers high quality equipment through its leasing program.
If you do decide to go with a solar lease, make sure that the equipment offered is reliable and that the installation will be done in a way that enhances the beauty of your home. For example, find out in advance where on your roof the panels will be installed. If it’s important to you that the panels be hidden from street view, then make sure that the installer is willing to honor that request, even if you go with a lease, where you’ll have less control.
When it comes time to sell, leasing companies will expect you to either get the buyer to assume the remaining time in the lease or else buy out the lease yourself, which can be an expensive proposition. Fortunately, most leasing companies offer an easy transfer process. Typically a homebuyer knows that your home has solar panels installed before they contact you from the photo in the MLS listing for your house.
While some home buyers aren’t ready to commit to a solar lease when they buy a house, other buyers will be glad to get a home that already has solar installed and they won’t mind finishing out your lease.
No Solution is One-Size-Fits-All
So, the bottom line is that you can’t say that either buying or leasing is better. Both are good ways to go solar at home in New Jersey for different situations.
If you can benefit from the federal tax credit and can qualify for a low-interest rate loan — or if you have ready cash to purchase a system all at once — then buying your own solar panels may be best. You’ll get the best return on your investment and save the most money on electricity.
But if you want to keep things simple and if you’re really just looking to start saving money right away without having to worry about a down payment or qualifying for a loan, then a solar lease might be right for you. It’s one of the quickest and easiest ways to start saving with solar power.
To discuss your options and find out if buying or leasing will be better for you, contact EcoMen Solar for a free quote. We’re pleased to offer both financing options and we’ll give you the information you need to make the best decision for your situation.
— Joe Aurilia, Jr., EcoMen Solar
Solar Solutions for New Jersey, New York, and Eastern Pennsylvania